In the Matter of County of Jefferson, Appellant,v.Nirav R. Shah,, et al., Respondents.BriefN.Y.September 7, 2016. ~· ·~· ."'."!i"il .. . . : -.'·e;_'t:·· .·. .. ·~ .. TABLE OF CONTENTS TABLE OF AUTHORITIES ...................................................................................................... iii PRELIMINARY STATEMENT ................................................................................................. 2 COUNTERSTATEMENT OF FACTS ....................................................................................... 5 The Medicaid Cap Statute ...................................................................................................... 7 Related Prior Litigation ......................................................................................................... 8 Section 61 of the 2012 Executive Budget Law .................................................................... 11 Recent Overburden Claims Submitted ............................................................................... 11 The Supreme Court Judgment ............................................................................................ 12 Invalidation of Section 61 by Additional Courts ................................................................ 13 ARGUMENT ............................................................................................................................... 13 POINT I- PETITIONER HAS CAPACITY TO CHALLENGE SECTION 61 ............ 13 A. Respondents Challenge Petitioner's Capacity to Bring this Proceeding ............. 14 B. Respondents Waived the Capacity Defense ............................................................ 18 C. Petitioner has Capacity to Challenge Section 61 as a Matter of Law ................... 19 POINT II - SECTION 61 IS UNCONSTITUTIONAL BECAUSE IT RETROACTIVELY DEPRIVES PETITIONER OF ITS VESTED RIGHT TO REIMBURSEMENT ............................................................................................................ 20 A. Section 61 Unconstitutionally Deprives Petitioner of its Vested Property Right to Reimbursement .......................................................................................... 21 B. Petitioner's Vested Rights to Overburden Reimbursement Are Not Subject to Retroactive Impairment ....................................................................................... 23 1. Section 61 is Manifestly Unfair ........................................................................... 24 2. Petitioner Properly Relied on Its Clear Entitlement to Overburden Reimbursement Under Social Services Law § 368-a ....................................... 28 3. The Extent of Section 61's Retroactivity is Excessive ....................................... 30 4. The Public Interest Requires Reimbursement of the Improperly Retained Overburden Payments to Petitioner .................................................................. 33 POINT III - SUPREME COURT PROPERLY COMPELLED RESPONDENTS TO REIMBURSE PETITIONER PURSUANT TO SOCIAL SERVICES LAW § 368-A .. 34 A. The Plain Language of Section 61 Does Not Extinguish Respondents' Underlying Reimbursement Obligation .................................................................. 34 B. Section 61 Retroactively Deprives Petitioner of its Vested Property Right to Reimbursement in Violation of General Construction Law§ 93 ......................... 37 C. Alternatively, the Special Facts Exception Bars Respondents from Relying on Section 61 to Deny Petitioner's Overburden Reimbursement Claims ........... 38 POINT IV - SUPREME COURT PROPERLY COMPELLED RESPONDENTS TO CALCULATE AND PAY ANY REMAINING OVERBURDEN REIMBURSEMENT DUE UNDER SOCIAL SERVICES LAW§ 368-A ..................... 40 POINT V - SUPREME COURT ERRONEOUSLY DENIED PETITIONER'S CLAIMS FOR UNJUST ENRICHEMENT, CONVERSION, AND CONSTRUCTIVE TRUST .................................................................................................. 42 A. Respondents are Liable for Conversion ..................................................... : ............ 43 B. Respondents are Unjustly Enriched at Petitioner's Expense ................................ 44 C. Supreme Court Erroneously Declined to Impose a Constructive Trust Over the Overburden Reimbursement Funds Owed to Petitioner ................................ 45 CONCLUSION ........................................................................................................................... 47 ii TABLE OF AUTHORITIES State Cases 230 Park Ave. Assoc. v State of New York, 165 Misc 2d 920 (Ct Cl 1995) .................................. 42 Alliance of Am. Insurers v Chu, 77 NY2d 573 (1991) ...................................................... 20, 21, 23 Andrews, Pusateri, Brandt, Shoemaker & Roberson, P. C. v Niagara Cnty. Sewer Dist. No. I, 71AD3d1374 (4th Dept 2010) ................................................................................................ 18 Blue Cross o.f Cent. N. Y. v Wheeler, 93 AD2d 995 (4th Dept 1983) ............................................ 44 Boltja v Southside Hosp., 186 AD2d 774 (2d Dept 1992) ...................................................... 32, 35 Brennan's Bus Serv .. Inc. v Brennan, 107 AD2d 858 (3d Dept 1985) ......................................... 43 Brothers v Florence, 95 NY2d 290 (2000) ................................................................................... 27 Caprio v New York State Department o.fTaxation and Finance, 117 AD3d 168 (1st Dept 2014) ................................................................................................................... 23, 33 Cimo v State o.(New York, 306 NY 143 (1953) ............................................................................ 35 Cinquemani v LG$io, 37 AD3d 882 (3d Dept 2007) ..................................................................... 46 City of New York v Lawton, 128 AD2d 202 (3d Dept 1987) ...................................... 16, 17, 38, 40 City of New York v State of New York, 86 NY2d 286 (1995) ............................... 15, 16, 17, 18, 19 Colavito v New York Organ Donor Network, Inc., 8 NY3d 43 (2006) ........................................ 43 County of Rensselaer v Regan, 173 AD2d 37 (3d Dept 1991), affd 80 NY2d 988 (1992) .... 15, 19 Dorfman v Leidner, 76 NY2d 956 (1990) .................................................................................... 30 Enzien v Enzien, 96 AD3d 1136 (3d Dept 2012) .......................................................................... 46 Esposito v State of New York, 35 Misc 3d 1216(A) (Ct Cl Dec. 27, 2011), qffd 112 AD3d 1006 (3d Dept 2013) ............................................................................................... 42 Ford Motor Credit Co. v State o.fNew York, 219 AD2d 202 (3d Dept 1996), lv denied 88 NY2d 813 (1996) ................................................................................................................. 42 Franza v Olin, 73 AD3d 44 (4th Dept 2010) ................................................................................ 21 iii Gilbert v Ackerman, 159 NY 118 (! 899) ...................................................................................... 26 Gulotta v State, 228 AD2d 555 (2d Dept 1996) ..................................................................... 16, 17 Henness v Hunt, 272 AD2d 756 (3d Dept 2000) .......................................................................... 46 Herzog v Board of Educ. of Lawrence Union Free School Dist., 171 Misc 2d 22 (Sup Ct, Nassau County 1996) .................................................................................................. 16 James Sq. Assoc. LP v Mullen, 21NY3d233 (2013) ....................................................... 21, 23, 33 James Sq. Assoc. LP v Mullen, 91AD3d164 (4th Dept 2011) .................................................... 22 Jeter v Ellenville Cent. School Dist., 41 NY2d 283 (1977) ........................................ 15, 16, 17, 18 Key Bank of New York v Grossi, 227 AD2d 841 (3d Dept 1996) ................................................. 43 Land Man Realty, Inc. v Weichert, Inc., 94 AD3d 1221 (3d Dept 2012) ..................................... 44 Lemle v Lemle, 92 AD3d 494 (!st Dept 2012) ............................................................................ .43 Matter of Amsterdam-Manhattan Assoc. v.!oy, 42 NY2d 941 (1977) ................................... 38, 40 Matter of Chrysler Props. v Morris, 23 NY2d 515 (1969) ........................................................... 21 Matter ofCifone v Aiello, 179 AD2d 876 (3d Dept 1992) ........................................................... 40 Matter of County of Cayuga v McHugh, 4 NY2d 609 (! 958) ...................................................... 16 Matter of County of Erie v Daines, 83 AD3d 1506 (4th Dept 2011) ............................................ 10 Matter a/County of Erie v Daines, 96 AD3d 1432 (4th Dept 2012) ............................................ 10 Matter of County of Fulton v State of New York, 76 NY2d 675 (1990) ....................................... 41 Matter of County of Herkimer v Daines, 83 AD3d 1510 {4th Dept 2011) ................................... 10 Matter a/County of Herkimer v Daines, 60 AD3d 1456 (4th Dept 2009), lv denied 63 AD3d 1672 (4th Dept 2009), lv denied 13 NY3d 707 (2009) .................................................................................................. 3, 8, 10, 21, 25, 28, 33, 37 Matter of County of Nassau v State a/New York, 100 AD3d 1052 (3d Dept 2012), lv dismissed 20 NY3d I 092 (20 l 3) ........................................................................................... 17 Matter of County of Niagara v Daines, 60 AD3d 1460 (4th Dept 2009) ..................................... 10 iv Matter of County of Niagara v Daines, 79 AD3d 1702 (4th Dept 2010) ................................. 8, I 0 Matter o,fCounty of Niagara v Daines, Sup Ct, Niagara County, Kloch, Sr., J., Feb. 18, 2010, Index No. 137680 ........................................................................................ 10, 21 Matter of County of Niagara v Daines, 9I AD3d 1288 (4th Dept 2012), lv denied 94 AD3d 1481 (4th Dept 2012) .......................................................................... 3, 10, 21, 22, 28 Matter o,fCounty of St. Lawrence v Daines, 81 AD3d 212 (3d Dept 201 l), lv denied 17 NY3d 703 (2011) .......................................................................................................... passim Matter o,f County of St. Lawrence v New York State Dept. of Health, Sup Ct, St. Lawrence County, June 20, 2013, Demarest, J., Index No. CV-2012-0140252 ....................................... 39 Matter of County o,fSt. Lawrence v Shah, 95 AD3d 1548 (3d Dept 2012) ........................... passim Matter of Crespo, 123 Misc 2d 862 (Sup Ct, New York County 1984) ....................................... 17 Matter of Faymor Dev. Co. v Board o,fStds. & Appeals of City o,f N. Y, 45 NY2d 560 (1978) .......................................................................................... ''' ........................................... 38 Matter of Graziano v County of Albany, 3 NY3d 475 (2004) ...................................................... 15 Matter of Hodes v Axelrod, 70 NY2d 364 (1987) .................................................................. 12, 21 Matter of Island Waste Servs., Ltd. v Tax Appeals Trib. of State ofN.Y., 77 AD3d 1080 (3d Dept 2010), Iv denied 16 NY3d 712 (201 I) ................................................................. 32, 35 Matter of Krauskopfv Perales, 139 AD2d 147 (3d Dept 1988), ajfd74 NY2d 730 (1989) .... 4, 20 Matter of Mamaroneck Beach & Yacht Club, Inc. v Zoning Bd. of Appeals o,f Vil. o,f Mamaroneck, 53 AD3d 494 (2d Dept 2008), lv denied I I NY3d 712 (2008) ......................... 40 Matter of Miller v Southold Town, l 90 AD2d 672 (2d Dept I 993) ............................................. 40 Matter of Monroe County Pub. School Dists. v Zyra, 51AD3d125 (4th Dept 2008), lv denied 52 AD3d 1293 (4th Dept 2008) ................................................................................. 36 Matter o,f Pokoik v Silsdorf, 40 NY2d 769 (1976) ........................................................................ 38 Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293 (1961) ........................................... 32, 35 Matter o,fThomas v Bethlehem Steel Corp., 63 NY2d 150 (1984) ............................................... 31 Matter ofT!ffany, 179 NY 455 (1904) .......................................................................................... 35 v Matter of Town of Moreau v County of Saratoga, 142 AD2d 864 (3d Dept 1988) ...................... 15 Meese v Miller, 79 AD2d 237 (4th Dept 1981) ............................................................................ 43 Moak v Raynor, 28 AD3d 900 (3d Dept 2006) ............................................................................. 46 Nastasi v.Nastasi, 26 AD3d 32 (2d Dept 2005) ............................................................................ 46 New York Blue Line Council v Adirondack Park Agency, 86 AD3d 756 (3d Dept 2011 ), app dismissed 17 NY3d 94 7 (2011 ), Iv denied 18 NY3d 806 (2012) ....................................... 15 0 'Neil v State of New York, 223 NY 40 (1918) ............................................................................ 29 Parsa v State of New York, 64 NY2d 143 (1984) ......................................................................... 42 Pines v State of New York, 115 AD3d 80 (2d Dept 2014), appeal dismissed23 NY3d 982 (2014) ....................... , ................................................................................................................ 35 Purcell v Regan, 126 AD2d 849 (3d Dept 1987), lv denied 69 NY2d 613 (1987) ....................... 17 Ring v Jones, 13 AD3d I 078 (4th Dept 2004) .............................................................................. 19 Rivera v Laporte, 120 Misc 2d 733 (Sup Ct, New York County 1983) ....................................... 17 Robert R. Gibbs, Inc. v State of New York, 70 AD2d 750 (3d Dept 1979) ................................... 42 Sharp v Kosmalski, 40 NY2d 119 (1976) ..................................................................................... 45 Simonds v Simonds, 45 NY2d 233 (1978) .............................................................................. 45, 46 State of New York v International Asset Recovery Corp., 56 AD3d 849 (3d Dept 2008) ............ 44 State of New York v Seventh Regiment Fund, Inc., 98 NY2d 249 (2002) .................................... 43 Stiver v Good & Fair Carting & Moving, Inc., 32 AD3d 1209 (4th Dept 2006), affd 9 NY3d 253 (2007) ................................................................................................................... 19 Thomas v Thomas, 70 AD3d 588 (1st Dept 2010) ........................................................................ 46 Thyroffv Nationwide Mut. Ins. Co., 8 NY3d 283 (2007) ............................................................. 43 Thys v Fortis Sec. LLC, 74 AD3d 546 (1st Dept 2010) ................................................................ 43 Town ofDelhiv Telian, 119AD3d1049 (3d Dept 2014) ............................................................ 18 vi Village of Herkimer v Axelrod, 58 NY2d 1069 (1983) ................................................................. 16 Federal Cases Rhem v Malcolm, 507 F2d 333 (2d Cir 1974) .............................................................................. 29 Township of River Vale v Town of Orangetown, 403 F2d 684 (2d Cir 1968) .............................. 17 Statutes, Constitutional Provisions & Regulations 18 NYCRR § 601.3 ......................................................................................................................... 8 18 NYCRR § 635.l(b) .................................................................................................................. 47 CPLR 321 l(a)(3), € ...................................................................................................................... 18 General Construction Law§ 93 ........................................................................................ 34, 37, 38 L 2005, ch 58, part C, § l(c) ......................................................................................................... 31 L 2005, ch 58, part C, § 1 ............................................................................................................... 7 L 2011, ch 59, part H, § 92(1) ....................................................................................................... 42 L 2012, ch 56, part D, § 61 ........................................................................................................... 34 L 2012, ch 56, part D, § 65(k) ................................................................................................. 22, 36 Social Services Law § 368-a .................................................................................................. passim Social Services Law§ 368-a(l)(h) ............................................................................. 22, 34, 35, 36 Social Services Law§ 368-a(l)(h)(i) ................................................................................ 28, 41, 47 Other Authorities Merriam-Webster's Collegiate Dictionary (11th ed 2004) ........................................................... 30 vii COUNTERSTATEMENT OF QUESTIONS PRESENTED I. Did Supreme Court, Jefferson County (Gilbert, J.), properly declare Section 61 of Part D of Chapter 56 of the Laws of2012 ("Section 61") unconstitutional? Supreme Court properly held that Section 61 retroactively impaired Petitioner's vested right to reimbursement for the overburden expenses that it incurred on Respondents' behalf prior to January 1, 2006 pursuant to Social Services Law § 368-a and was therefore unconstitutional. 2. Did Supreme Court, Jefferson County properly compel Respondents to calculate and reimburse Petitioner for the total remaining overburden expenses that it incurred on Respondents' behalf prior to January I, 2006 in accordance with the clear statutory mandates of Social Services Law § 368-a(l )(h)? Supreme Court properly awarded Petitioner mandamus relief compelling Respondents to calculate and reimburse Petitioner for the total remaining overburden expenses that it incuned on Respondents' behalf prior to January l, 2006 in accordance with Social Services Law§ 368-a. 3. Did Supreme Court, Jefferson County erroneously dismiss Petitioner's claims for unjust enrichment, conversion, and constructive trust on the ground that those claims could not be maintained against Respondents? Notwithstanding that Petitioner had established the necessary legal elements of claims for unjust enrichment, conversion, and constructive trust, Supreme Court held that Petitioner's claims could not be maintained against Respondents as the State. PRELIMINARY STATEMENT Petitioner County of Jefferson ("Petitioner") respectfully submits this brief in opposition to the appeal of Respondents Nirav R. Shah, as Commissioner of the New York State Department of Health, and the New York State Department of Health (collectively, "Respondents") and in support of its cross appeal from the Order and Judgment of Supreme Court, Jefferson County (Gilbert, J.), dated February 14, 2014 and entered February 27, 2014, declaring Section 61 of the 2012 Executive Budget unconstitutional, annulling the detennination of Respondents to deny Petitioner's claims for overburden reimbursement, directing Respondents to pay Petitioner's claims in the total amount of $114,501.50, and compelling Respondents to calculate and pay Petitioner for the total remaining overburden reimbursements owed. The reimbursement sought in this proceeding is for Medicaid local share payments made by Petitioner commonly known as "overburden" under Social Services Law § 368-a. Similar proceedings relating to the counties' entitlement to overburden reimbursement are presently before this Court in Matter of County of Niagara v Shah (Appeal No. CA 13-02010) and Matter of County of Chautauqua v Shah (Appeal No. CA 14-00923), and before the Third Department in Matter a,( County of St. Lawrence v Shah (Appeal Nos. 518097, 518220, 518221) and Matter of County o,f Chemung v Shah (Appeal No. 518222). This Court and the Third Department have repeatedly held that Social Services Law § 368-a unambiguously entitles Petitioner to full reimbursement for the overburden local share payments taken by Respondents prior to January 1, 2006. Yet, for at least the last twenty years, Respondents have patently failed or simply refused to calculate and pay the total reimbursement liability owed to Petitioner, in accordance with the clear statutory direction. As they have done in prior litigations, Respondents now attempt to foist their unilateral reimbursement duty upon Petitioner by touting the availability of a voluntary reimbursement claims process. Respondents, 2 however, have not voluntarily paid a single overburden reimbursement claim since April 2005, when they unilaterally suspended the claims process without notice or justification and have only paid such claims after being compelled to do so by the courts following exhaustive litigation, including nine appellate decisions. In addition, Respondents have repeatedly attempted to extinguish the undisputed reimbursement debt owed to Petitioner and the other counties by retroactive legislation. First, it was the Medicaid Cap Statute. When this Court and the Third Department rejected Respondents' plainly erroneous claim that the prospective Medicaid Cap Statute was somehow intended to deprive the counties of their vested rights to overburden reimbursement retroactively and further rejected Respondents' contentions that these reimbursement claims are untimely (see Matter of County of Herkimer v Daines, 60 AD3d 1456 [4th Dept 2009], Iv denied 63 AD3d I 672 [4th Dept 2009], Iv denied 13 NY3d 707 (2009]; see also Matter of County of St. Lawrence v Daines, 81 AD3d 212 [3d Dept 2011) ["St. Lawrence I"], lv denied 17 NY3d 703 (2011]), Respondents returned to the Legislature for another bite at the apple. This Court and the Third Department again rebuffed Respondents' attempt to impair the counties' vested rights through the 2010 Amendment to the Medicaid Cap Statute (see Matter of County of Niagara v Daines, 91 AD3d 1288 [4th Dept 2012], Iv denied 94 AD3d 1481 [4th Dept 2012]; see also Matter of County of St. Lawrence v Shah, 95 AD3d 1548 [3d Dept 20 J 2] ["SI. Lawrence IF']). Having twice failed to secure expressly retroactive legislation that could be construed as "walling off' all claims for overburden reimbursement, Respondents drafted and submitted Section 61 to the Legislature for inclusion in the 2012 Executive Budget in an admitted attempt to retroactively abrogate their undisputed overburden reimbursement debt in its entirety. Respondents now are using Section 61 to relitigate the Medicaid Cap Statute and the 20 I 0 Amendment. 3 In accordance with the Third Department's decision in St. Lawrence II, Supreme Court, Jefferson County properly held that Section 61 unlawfully impairs Petitioner's rights with respect to obligations already accrued, and is therefore unconstitutional. Notwithstanding that Supreme Court extinguished the only possible bar to granting Petitioner mandamus relief compelling Respondents to calculate and pay Petitioner the total remaining overburden reimbursement liability owed, Supreme Court declined Petitioner's request to resolve this dispute once and for all. Supreme Court's refusal to compel Respondents to finally calculate and reimburse Petitioner for the total outstanding overburden liability in accordance with the mandatory and ministerial reimbursement duty under Social Services Law § 368-a was error. In the court below, Respondents' principal argument was that Section 61 "clarified" that the original Medicaid Cap Statute was intended to extinguish retroactively Respondents' obligation to reimburse the counties for the local share payments improperly taken by Respondents. After ten trial courts, including the court below, summarily rejected that argument, Respondents on appeal have essentially abandoned the clarifying amendment argument and offered an entirely new principal argument: that Petitioner lacks the right to challenge Section 61. Distilled to its essence, Respondents challenge Petitioner's capacity, as a municipality, to seek to invalidate State legislation. Respondents, however, waived this argument by failing to assert it in their answer or otherwise raise it below. In any event, based upon the Third Department's prior holding in Matter of Krauskopfv Perales (139 AD2d 147 [3d Dept 1988]) and Respondents' admissions in this proceeding, there is no dispute that Petitioner has asserted a proprietary interest in a specific fund of money and, therefore, one of the four exceptions to the general rule barring municipal challenges to State legislation is applicable. Thus, as a matter of law, Petitioner has capacity to bring this proceeding. 4 Supreme Court's decision is neither novel nor controversial. Rather, it is consistent with settled law, including St. Lawrence II, in which the Third Department unequivocally stated that Respondents cannot retroactively extinguish their overburden reimbursement debt to Petitioner. Indeed, nine other Supreme Courts (Broome, Cayuga, Chautauqua, Chemung, Genesee, Monroe, Niagara, Oneida, and St. Lawrence) have summarily rejected Respondents' reliance on Section 6 I. Thus, the invalidation of Section 61 should be affirmed because it unconstitutionally deprives Petitioner of its vested rights. Having eliminated the only possible bar to granting Petitioner mandamus relief, Supreme Court should have compelled Respondents to calculate and pay all unpaid overburden reimbursement owed to Petitioner in accordance with Social Services Law§ 368-a. For these reasons and those set forth more fully below, Petitioner respectfully requests that this Com't modify the Supreme Court judgment by granting Petitioner's request for mandamus relief compelling Respondents to calculate and pay Petitioner the total remaining overburden reimbursements owed and, as so modified, affirm. COUNTERSTATEMENT OF FACTS New York's Medical Assistance program makes Petitioner, and other counties throughout the state, responsible for providing Medical Assistance to eligible patients (Record on Appeal ["R"] 96-97). Although New York originally required the counties to pay fifty percent of Medical Assistance costs not covered by federal payments, commonly known as the counties' "local share," in the J 980s, the Legislature recognized that this policy would dramatically increase the total Medical Assistance costs that the counties would incur (R 97-98). To mitigate this overwhelming burden, the Legislature eliminated the counties' obligation to pay a local share of the Medical Assistance costs and required Respondents to reimburse the counties for the local shares paid by the counties for Medical Assistance provided to certain indigent, mentally 5 disabled persons (R 98). As part of this fiscal relief enactment, the Legislature amended Social Services Law§ 368-a to add subdivision (l)(h), which provides counties with/ull reimbursement for their local shares for this category of Medical Assistance recipients, known as "overburden" recipients (id.). Respondents, not the counties, were directly billed by the service providers for the costs of the Medical Assistance services rendered to the overburden recipients (see County of St. Lawrence v Daines, 81 AD3d at 218). Since Respondents made payments directly to the providers, only Respondents could verify the costs. Without providing any verification of the costs, Respondents automatically collected the local shares from Petitioner, on a weekly basis, and deposited them into a special bank account maintained by the State Comptroller (R 414). In the mid-1990s, Respondents improperly changed the codes on the State-owned computer system for certain categories of individuals for whom the counties were not fiscally responsible, including overburden recipients (R 465-467, 471-473, 476-479). Respondents admit that they, not Petitioner, were responsible for identifying and coding the overburden individuals (R 415). Furthermore, Respondents have never disputed that they were solely responsible for the failure to properly code these recipients on the state computer system nor have they provided an explanation as to how it happened (R 415-417, 472, 476-479, 483-484). As a result of the improper coding, Respondents failed to reimburse Petitioner and the other counties, and concealed their obligation to do so (see County of St. Lawrence v Daines, 81 AD3d at 218). As they did in St. Lawrence !, Respondents contend here that Petitioner could have discovered the improper coding by reviewing limited, pro forma statistical reports and other data that Respondents purportedly provided to Petitioner (Brief for Appellants ["Resps' Br."], at 5-6). The reports and data provided by Respondents, however, do not list or otherwise disclose which individuals Respondents improperly failed to code as overburden, or provide any other notice to 6 Petitioner that certain individuals either had not been properly coded or had been decoded (R 416-419). Without receiving any notice of the improper coding from Respondents, there was no reason for Petitioner to suspect that overburden eligible individuals were missing from the State's computer system and the pro forma statistical reports. This is particularly true since Respondents destroyed records that would have assisted in identifying the uncoded overburden recipients (R 480), and have abjectly refused to turn over other relevant documents to date (R 194-329, 480-481). Absent Respondents' identification of the uncoded individuals and disclosure of the relevant records, it was impossible for Petitioner and the counties to identify the unpaid overburden reimbursement (R 476-477). In April 2005, Respondents took yet another step to a.void their unambiguous overburden reimbursement obligation. Without any notice to the counties, Respondents summarily ordered the Office of Temporary and Disability Assistance ("OTDA") to suspend any and all processing or payment of overburden reimbursements to the counties (R I 00, 467). Thus, even if Petitioner and the counties knew of the unpaid overburden reimbursement (which they did not) and could have identified any of the unpaid overburden reimbursement (which they could not), there would have been no means for them to recover the unpaid overburden reimbursement from Respondents. In sum, Respondents have refused to voluntarily pay a single overburden reimbursement claim to any county since at least March 2005, if not earlier (as suggested by Respondents' litigation history and the record evidence) (R 467-469, 488-490, 815-819). The Medicaid Cap Statute In 2005, the Legislature adopted a "cap" methodology to limit, in subsequent calendar years, the total amount of Medical Assistance expenses that the counties were required to pay to Medical Assistance-eligible patients in the first instance (see L 2005, ch 58, pt C, § I [hereinafter, the "Medicaid Cap Statute"]). The basic principle of this cap methodology was to 7 use 2005 as a base year for a county's total Medical Assistance expenditures, and to then guarantee that future expenditures did not increase unreasonably above that amount (see id. § 1 [b]-[d]). Notably, the Medicaid Cap Statute incorporated the overburden reimbursement obligation prospectively, effective January 1, 2006, while leaving it unchanged retrospectively (R 129). As such, after adoption of the Medicaid Cap, Respondents remained liable to reimburse the counties 100% of their local shares paid prior to January 1, 2006 on behalf of overburden-qualifying mentally disabled persons (id.). Related Prior Litigation In 2006, Respondents arbitrarily denied the counties' claims for overburden reimbursement, forcing those counties to challenge Respondents' denial of reimbursement in a series of expensive lawsuits (R 130-131 ). In those litigations, Respondents initially argued that the counties' claims for overburden reimbursement were barred by the Medicaid Cap Statute (R 130). This Court properly rejected that argument, holding that the Legislature "did not intend [the Medicaid Cap Statute] to be retroactively applied" (County of Herkimer v Daines, 60 AD3d at 1457). Within days after this Court's decision, Respondents began denying overburden reimbursement claims on timeliness grounds, including on the basis that the claims allegedly were not submitted in accordance with the time requirements of 18 NYCRR § 601.3 (see Matter of County of Niagara v Daines, 79 AD3d 1702, 1705 [4th Dept 2010], lv denied 82 AD3d 1719 [4th Dept 2011], lv denied 17 NY3d 703 [2011]; County of St. Lawrence v Daines, 81 AD3d at 216). This Court rejected both of these arguments, holding that the Medicaid Cap Statute only applies prospectively, and that Section 601.3 time limits do not apply to these reimbursement claims (County of Niagara v Daines, 79 AD3d at 1703, 1705; see also County of St. Lawrence v Daines, 81 AD3d at 216-217). In St. Lawrence I, Respondents made, and the Third Department 8 rejected, the identical argument as presented in this appeal; namely, Petitioner should have submitted the otherwise "stale" reimbursement claims earlier based upon the limited pro forma statistical reports allegedly provided by Respondents (compare R 475-477 with R 245-247). While these first two rounds of litigation were still pending, the Legislature, in 2010, amended the Medicaid Cap Statute to provide that "the state/local social services district relative percentages of the non-federal share of medical assistance expenditures incurred prior to January I, 2006 shall not be subject to adjustment on and after July 1, 2006" (L 2010, ch 109, part B, § 24). In effect, this amendment locked in a county's percentage share for the cost of Medicaid services at the figure calculated under the cap (R 132). In or around 2010, the counties again submitted overburden reimbursement claims to Respondents (R 133). Respondents denied those reimbursement claims, this time on the basis that the 2010 Amendment extinguished the counties' right to reimbursement (id.). As a result, the counties were forced to commence litigation to compel Respondents to make the reimbursements. After many courts throughout the state once again rejected Respondents' arguments, the Third Department in St. Lawrence II rejected Respondents' reliance on the 2010 Amendment (see County of St. Lawrence v Shah, 95 AD3d at 1553-1554). In its decision, this Court cogently explained why Respondents could not retroactively avoid their statutory reimbursement obligation to the counties under Social Services Law§ 368-a: [I]t has been the state's statutory obligation to pay the county-share for Medicaid expenditures incurred in providing medical services to certain mentally disabled individuals. While the state, and not the county, has been obligated to pay for these medical services, it has continued to charge petitioner for these expenses and used these funds to satisfY its obligations under this statute. Since the state was never entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, cannot serve to transform these county fonds into state property and relieve the state of the legal obligation to return them. . . . This Court has previously held that "prior to 2006, upon payment to DOH for services provided to overburdened patients for which no local share was owing, petitioner's right to reimbursement for such expenditures accrued" (Matter of St. 9 Lawrence County v. Daines, 81 A.D.3d at 216, 917 N.Y.S.2d 330). Thus, the 2010 amendment, even if it was intended by the Legislature to repeal Social Services Law§ 368-a {l)(h), cannot serve to relieve the state of its obligation to refund the counties for these expenditures made prior to .January 1, 2006 (id. [emphasis added]). This Court similarly rejected Respondents' arguments (see County of Niagara v Daines, 91 AD3d at 1289). Nevertheless, Respondents continued to reject claims on the basis of the 2010 Amendment until after the Third Department issued its decision in Matter of County of St. Lawrence v Shah (95 AD3d 1548 [3d Dept May 17, 2012]) (R 134). The refusal by Respondents to reimburse the counties from 2006 to 2012 resulted in nine appellate decisions compelling Respondents to honor their statutory duty (see Matter of County of St. Lawrence v Shah, 95AD3d 1548 [3d Dept 2012]; Matter of County of Niagara v Daines, 91 AD3d 1288 [4th Dept 2012); Matter of County of Erie v Daines, 96 AD3d 1432 [4th Dept 2012); Matter of County of Herkimer v Daines, 83 AD3d 1510 [4th Dept 2011]; Matter of County of Erie v Daines, 83 AD3d 1506 [4th Dept 2011); Matter of County of St. Lawrence v Daines, 81 AD3d 212 [3d Dept 2011]; Matter o.f County of Niagara v Daines, 79 AD3d 1702 [4th Dept 2010); Matter of County of Herkimer v Daines, 60 AD3d 1456 [4th Dept 2009); Matter of County of Niagara v Daines, 60 AD3d 1460 [4th Dept 2009]). As is the case in the instant appeal, Respondents in the nine prior appellate cases did not dispute that the State had failed to reimburse the counties for overburden local share payments improperly taken prior to 2006. Notably, despite these decisions directing Respondents to reimburse the counties for certain overburden recipients, Respondents have to date abjectly failed to correct the coding for these recipients, in apparent defiance of a number of court orders, including Supreme Court, Niagara County's order in Matter of County of Niagara v Daines (Sup Ct, Niagara County, Kloch, Sr., J., Feb. 18, 2010, Index No. 137680) (R 472-479). The undisputed and intentional 10 refusal to properly code individuals to date has allowed and will continue to allow Respondents to reap enormous windfalls (beyond the admitted windfall of refusing to reimburse for pre-2006 payments at issue in this and prior litigations) at the expense of Petitioner and the counties (R 483-486). Section 61 of the 2012 Executive Budget Law After all of Respondents' prior legal arguments to avoid the State's undisputed debt to the counties failed, Respondents resorted to a new tactic--asking the Legislature to pass an unambiguously retroactive statute in an attempt to extinguish permanently the counties' vested rights to reimbursement, despite the Third Department's express warning in St. Lawrence II that Respondents could not do so (R 102-103). Section 61 expressly provides that "[n]otwithstanding the provisions of section 368-a of the social services law or any other contrary provision of law, no reimbursement shall be made for social services districts' claims submitted on and after the effective date of this paragraph, for district expenditures incurred prior to January 1, 2006" (R 358). Section 61 was introduced to the Legislature on January 17, 2012 and became effective upon its enactment on April 1, 2012 (Resps' Br., at JO; see also R 358, 425). At tl1e time Section 61 was introduced, therefore, Respondents still were rejecting overburden claims based upon the 2010 Amendment (R 425, 817-819). Respondents' suggestion that they voluntarily paid overburden claims between the introduction of Section 61 and its enactment (Resps' Br., at 11, 28-29), therefore, is patently false (R 481-482, 489-491, 816-819). Thus, no grace or limitations period was afforded to the counties to allow them to identify and seek unpaid overburden reimbursement (R 104). Recent Overburden Claims Submitted On or about June 12, 2013, Petitioner submitted claims for overburden reimbursement to 11 Respondents in the total amount of $114,501.50 (R 104). By form letter, Respondents denied those claims in their entirety, based solely on the retroactive application of Section 61 id. Thus, Respondents' actions once again left Petitioner with no alternative but to challenge the deprivation of its reimbursement rights in the courts. The Supreme Court Judgment On December 23, 2013, Supreme Court, Jefferson County (Gilbert, J.) issued an Order and Judgment declaring Section 61 of the 2012 Executive Budget unconstitutional, annulling the determination of Respondents to deny Petitioner's claims for overburden reimbursement, directing Respondents to pay Petitioner's claims in the total amount of $114,501.50, and compelling Respondents to calculate and pay Petitioner for the total remaining overburden reimbursements owed (R 51-52). In its comprehensive decision, Supreme Court, Jefferson County held that: (1) under the special facts exception, Jefferson County's claim for reimbursement must be treated under Social Services Law § 368-a "as it existed at the time that [Jefferson County] incurred the overburden expenses"; (2) Section 61 does not alter Respondents' "underlying obligation to calculate the total reimbursement liability and pay what is owed"; (3) Section 61 is unconstitutional, because it retroactively deprives Jefferson County of a "vested property right to reimbursement which the Legislature lacked authority to abolish"; (4) Section 61 is not a clarifying amendment, as Respondents contended; (5) the factors set forth in Matter of Hodes v Axelrod, 70 NY2d 364 (1987) tip decidedly in favor of Jefferson County; and (6) Section 61 "was drafted, squirreled away in a massive budget bill and enacted for the purpose of walling off existing debt and avoiding legitimate fiscal responsibility to the counties of the State of New York, which was not proper" (R 54-84). Supreme Court, however, denied Petitioner's claims for unjust enrichment, conversion, and constructive trust on the sole ground that those claims could not be maintained against "the State of New York or a State agency" (R 12 80-83). Respondents appealed and Petitioner cross-appealed from the Supreme Court judgment (R 5-8). Invalidation of Section 61 by Additional Courts In addition to Supreme Court, Jefferson County's decision, nine other trial courts have held that Section 61 is unconstitutional or that Respondents cannot rely on Section 61 to avoid their overburden reimbursement obligation, including the Supreme Courts in Broome County (Tait, J.), Cayuga County (Leone, J.), Chautauqua County (Chimes, J.), Chemung County (O'Shea, J.), Genesee County (Noonan, J.), Monroe County (Polito, J.), Niagara County (Nugent-Panepinto, J.), Oneida County (Clark, J.), and St. Lawrence County (Demarest, J.). Copies of these courts' decisions and orders are included in the accompanying Addendum. ARGUMENT POINT I PETITIONER HAS CAPACITY TO CHALLENGE SECTION 61 Respondents assert that Petitioner, as a subdivision of the State, is not a "person" with due process rights vis-a-vis the State, and thus can never have a remedy with respect to the overburden reimbursement owed under Social Services.Law § 368-a, which they claim has been repealed by implication (Resps' Br., at 15-19). This new argument fails for three reasons. First, despite Respondents' mischaracterization of this argument as relating to the merits of Petitioner's vested rights and due process claims, the ability of a municipality to assert constitutional claims against the State is an issue of capacity to sue. Respondents, however, waived capacity as a defense by failing to plead it in their Verified Answer. Second, Respondents' new argument, even if the failure to raise it as an affirmative defense could be ignored, was not raised before Supreme Court below, thereby denying Petitioner the opportunity to contest it on the facts and law. Thus, the argument is unpreserved for appellate review and 13 should not be considered by this Court. Finally, even if this argument were not indisputably waived and unpreserved, it fails as a matter of law because it is well established that a municipality may assert constitutional claims against the State when, as here, it does so in its proprietary, as opposed to governmental, capacity. To preclude Petitioner from seeking judicial review of the Legislature's attempt to "wall off' Respondents' prior undisputed obligations to Petitioner, as Respondents would have it, merely because Petitioner is a political subdivision is contrary to law and would impennissibly afford the State unbridled authority to legislate away its debts whenever it no longer desired to pay them. Thus, this Court should flatly reject Respondents' waived and unpreserved argument that Petitioner lacks capacity to challenge the unconstitutional deprivation of its vested and due process rights. A. Respondents Challenge Petitioner's Capacity to Bring this Proceeding. Respondents contend that Petitioner's due process and vested rights claims fail because Petitioner, as a political subdivision of the State, can never assert a due process or vested rights claim against the State (Resps' Br., at 14-19). Contrary to Respondents' mischaracterization of this argument, it is beyond cavil that the ability of a municipality to bring constitutional claims against the State is an issue of capacity to sue, which must be raised as an affirmative defense. Respondents' argument to the contrary is, at best, a fundamental misstatement of the law. In addition to being directly controverted by the legion of cases in which New York courts have uniformly treated this issue as one of capacity to sue, Respondents' argument also must fail because the law is clear that municipalities are entitled to due process of law under the New York State Constitution, and have capacity to assert those rights against the State when acting in a proprietary capacity. The general rule is that "municipalities and other local governmental corporate entities 14 and their officers lack capacity to mount constitutional challenges to acts of the State and State legislation" (City of New York v State of New York, 86 NY2d 286, 289 [1995] [emphasis added]). Capacity, however, is a threshold issue that "concerns a litigant's power to appear and bring its grievance before the court" (New York Blue Line Council v Adirondack Park Agency, 86 AD3d 756, 758 [3d Dept 2011), app dismissed 17 NY3d 947 [201 J], Iv denied 18 NY3d 806 [2012), quoting Matter of Graziano v County of Albany, 3 NY3d 475, 478-479 [2004] [internal quotation marks and citation omitted]), and does not speak to the merit of the underlying claim. Jt is well settled that there are four exceptions to the general rule that a municipality does not have capacity to sue the State. One of the exceptions applies where, as here, the State legislation adversely affects a municipality's proprietary interest in a specific fund of moneys (City of New York, 86 NY2d at 291-292; see also County of Rensselaer v Regan, 173 AD2d 37, 40 [3d Dept 1991 ], qffd 80 NY2d 988 (1992]; Matter of Town of Moreau v County of Saratoga, 142 AD2d 864, 865 [3d Dept 1988]). The very existence of these exceptions to the capacity general rule, which are articulated in the only decision cited by Respondents (see Jeter v Ellenville Cent. School Dist., 41 NY2d 283 [1977]), undermine Respondents' contention that a municipality is incapable of asserting a due process/vested rights claim against the State as a matter of substance. Respondents nonetheless conflate the threshold rule cited above with the merits of Petitioner's constitutional claims. Respondents' argument is based entirely upon the line of cases that the Court of Appeals in City of New York comprehensively collected, discussed, and explicitly held to be limited to the waivable issue of capacity to sue (see City of New York, 86 NY2d at 289-290 [collecting and discussing cases] ["Viewed, therefore, by the courts as purely creatures or agents of the State, it followed that municipal corporate bodies cannot have the right to contest the actions of their principal or creator affecting them in their governmental capacity 15 or as representatives of their inhabitants" (emphasis added)]). In fact, the only decision on which Respondents rely (see Resps' Br., at 18, citing Jeter, 41 NY2d at 287) cites the same line of cases, all of which note the distinction between a municipality's governmental and proprietary functions. For example, the Court of Appeals in Jeter cited Matter of County of Cayuga v McHugh ( 4 NY2d 609 (1958]) in support of its holding that the municipalities could not raise "these constitutional challenges" (Jeter, 41 NY2d at 287). In County of Cayuga, the Court of Appeals held that Cayuga County could not raise a due process challenge to a determination closing a jail because the determination did not "deprive the county of any property rights" (County of Cayuga, 4 NY2d at 616). The courts of this State have unifo1mly treated this issue as one of capacity to sue and contemporaneously acknowledged that a municipality has substantive due process and other constitutional rights against the State that may be asserted under one of the four enun1erated exceptions to the general rule (see City of New York, 86 NY2d at 291-292). Notably, this includes decisions specifically addressing a municipality's right to bring a due process claim against the State seeking to invalidate an act of the Legislature (see Village of Herkimer v Axelrod, 58 NY2d 1069, I 071 (1983] [treating State's challenge to political subdivision's due process claim as a capacity/standing defense]; Gulotta v State, 228 AD2d 555, 556 [2d Dept 1996) [holding that municipalities lacked capacity to assert due process and equal protection claims because none of the four exceptions to the general rule applied], citing Jeter, 41 NY2d at 287; City of New York v Lawton, 128 AD2d 202, 206 [3d Dept 1987]; Herzog v Board of Educ. of Lawrence Union Free School Dist., 171 Misc 2d 22, 26-27 [Sup Ct, Nassau County 1996] [holding that municipality Jacked capacity to bring a due process claim]). That Respondents are, in fact, raising capacity was most recently affirmed by the Third Department in Matter of County of Nassau v State of New York (100 AD3d 1052 [3d Dept 2012], 16 lv dismissed 20 NY3d 1092 [2013}). There, the Third Department held that the County lacked the legal capacity to challenge the constitutionality of a statute because "municipal entities generally 'cannot have the right to contest the actions of their principal or creator affecting them in their governmental capacity or as representatives of their inhabitants"' (id at 1054-1055 [emphasis added], quoting City of New York, 86 NY2d at 290). Notably, the Third Department explicitly based its determination upon a finding that none of the four exceptions to the general incapacity rule applied (id, citing, inter alia, Jeter, 41 NY2d at 287). Indeed, where one of the enumerated exceptions to the general threshold capacity rule applies, Respondents cannot dispute that a municipality may bring a constitutional claim against the State. For example, in Purcell v Regan (126 AD2d 849 [3d Dept 1987), lv denied 69 NY2d 613 [1987]), this Court held that the County of Nassau could challenge a state statute on constitutional grounds because it did not do so in its governmental capacity (id. at 850). Similarly, in Matter of City of New York v Lawton (128 AD2d 202 [3d Dept 1987)), the Third Department held that a municipality had capacity to assert a constitutional claim against the State because it claimed "entitlement to a specific fund" and, therefore, was asserting its proprietary, as opposed to governmental, rights (id. at 206). In short, Respondents' suggestion that a municipality may never bring a due process or vested rights claim against the State is a fundamental misstatement of the law (see Matter of Crespo, 123 Misc 2d 862, 866 [Sup Ct, New York County 1984]; Rivera v Laporte, 120 Misc 2d 733, 740 [Sup Ct, New York County 1983]; see also Township of River Vale v Town of Orangetown, 403 F2d 684, 686 [2d Cir 1968]). Rather, a municipality's ability to assert due process and vested rights claims against the State is a threshold issue of capacity (see Gulotta, 228 AD2d at 556). Respondents' new argument on appeal ignores the well-settled rule that a municipality may challenge the constitutionality of a statute in its proprietary, as opposed to 17 governmental, capacity, and therefore should be rejected by this Court. B. Respondents Waived the Capacity Defense. It cannot be disputed that lack of capacity is an affirmative defense that must be pled in the answer or else it is waived (see CPLR 3211 [a] [3 ), [ e); City of New York, 86 NY2d at 292; see also Town of Delhi v Telian, 119 AD3d 1049, 1050 [3d Dept 2014); Andrews, Pusateri, Brandt, Shoemaker & Roberson, P.C. v Niagara Cnty. Sewer Dist. No. 1, 71 AD3d 1374, 1375 [4th Dept 201 OJ). Here, Respondents failed to plead lack of capacity in their Verified Answer (R 400-406). Thus, Respondents have waived their lack of capacity argument, and this Court should decline to consider it (see Town q( Delhi, 119 AD3d at I 050 ["inasmuch as defendant can no longer raise the issue of plaintiffs capacity to sue in this action (due to waiver), plaintiffs arguments regarding its capacity have been rendered academic, and we decline to address them"]). In an attempt to avoid their clear waiver, Respondents rely solely on the reference by the Court of Appeals in Jeter to a municipality's "substantive right to raise these constitutional challenges" (Resps' Br,, at 18, quoting Jeter, 41 NY2d at 287). The Court's reference in Jeter to the "substantive right" to sue, however, is a precise reference to the municipality's legal capacity to sue, as conclusively indicated by the Court's statement-in the subsequent sentence-that the municipalities did not have the "substantive" right to sue because none of the recognized exceptions to the capacity rule applied (Jeter, 41 NY2d at 287). In contrast, one of the recognized exceptions indisputably applies here and, therefore, Respondents' reliance on Jeter is inapposite. Respondents' argument is in fact a baseless capacity defense that they plainly waived by failing to assert it as an affirmative defense in their answer (see City of New York, 86 NY2d at 292). Even if Respondents had not waived their lack of capacity argument, their failure to raise it before Supreme Court at any time during the proceedings below renders it unpreserved for 18 appellate review (see Stiver v Good & Fair Carting & Moving, Inc., 32 AD3d 1209, 1211 [4th Dept 2006], ajfd 9 NY3d 253 [2007]; Ring v Jones, 13 AD3d 1078, 1079 [4th Dept 2004]). Thus, Respondents should not be pennitted to raise their unpreserved argument here, and this Court should decline to consider it. C. Petitioner has Capacity to Challenge Section 61 as a Matter of Law. Even ignoring Respondents' waiver and failure to preserve their capacity argument, it cannot be disputed that Petitioner fits within the long-standing exception that a political subdivision has capacity to challenge State legislation where "the State legislation adversely affects a municipality's proprietary interest in a specific fund of moneys" (City of New York, 86 NY2d at 291-292). The key factor in determining the existence of a specific fund for purposes of this exception is whether the monies have already been collected by the State, which has indisputably occurred here (see County of Rensselaer v Regan, 173 AD2d 37 [3d Dept 1991], ajfd 80 NY2d 988 [l 992]). In County of Rensselaer, the Third Department notably held that the counties had capacity to sue "because they [were] asserting a proprietary claim of entitlement to a specific fund, namely, their entitlement to receive all of the fines, forfeitures and penalties collected by the courts in proceedings on the offenses specified in the STOP-DWI legislation" (id. at 40 [emphasis added]). Here, Petitioner's proprietary right is even more concrete because Respondents admit that DOH took Petitioner's money (the local share payments) and placed that money into "a special bank account maintained by the State Comptroller" (R 436). It is in that specific fund in which Petitioner has a proprietary interest, and from which Petitioner's overburden reimbursement should have been paid. Thus, Respondents' admission alone is dispositive of Petitioner's capacity to challenge the retroactive deprivation of Petitioner's vested overburden reimbursement rights. 19 In any event, the Third Department already has held that municipalities have a property interest in the overburden funds collected by the State. Specifically, in Matter of Krauskopf v Perales (139 AD2d 147 [3d Dept 1988], ajfd 74 NY2d 730 [1989]), the Third Department held that the overburden local shares paid by social services districts and held by Respondents constitute a specific fund within the meaning of the exception to the general incapacity rule (id. at 153). The Third Department's decision, addressing a local social services district's proprietary interest in the State's specific fund for overburden reimbursement, is directly on point here. This Court should thus follow the Third Department's guidance and reject Respondents' challenge to Petitioner's capacity. POINT II SECTION 61 IS UNCONSTITUTIONAL BECAUSE IT RETROACTIVELY DEPRIVES PETITIONER OF ITS VESTED RIGHT TO REIMBURSEMENT Respondents argue that the Legislature is permitted to extinguish Petitioner's vested right to overburden reimbursement retroactively because the balance of factors articulated by the Court of Appeals in Alliance of Am. Insurers v Chu (77 NY2d 573, 585-586 [1991]) to determine whether vested rights may be impaired by retroactive legislation "decisively" tips in their favor (Resps' Br., at 21). Respondents are mistaken. As the Third Department expressly cautioned in St. Lawrence JI, Petitioners' vested rights to reimbursement cannot be abrogated retroactively, even if legislation does so expressly (see County of St. Lawrence v Shah, 95 AD3d at 1553- 1554). That the Third Department's conclusion with respect to Respondents' interpretation of the 20 I 0 Amendment was made in dictum does not undermine its rationale. Indeed, Respondents take the same position here that they did in the prior cases before this Court and the Third Department-that a retroactive statute extinguishes the State's undisputed reimbursement debt (see id.; see also County of Niagara v Daines, 91 AD3d at 1288-1289). Thus, no basis 20 exists to impugn the TI1ird Department's rationale in St. Lawrence II that a retroactive enactment, such as Section 61, cannot extinguish Petitioner's vested rights to overburden reimbursement. A. Section 61 Unconstitutionally Deprives Petitioner of its Vested Property Right to Reimbursement. Section 61 is an unambiguously retroactive Jaw, and should be viewed with skepticism (see e.g. Matter of Ckrysler Props. v Aforris, 23 NY2d 515, 521 [1969]). As aptly restated by the Court of Appeals last year, "[f]or centuries our law has harbored a singular distrust of retroactive statutes" (James Sq. Assoc. LP v Mullen, 21 NY3d 233, 246 [2013] [internal quotation marks and citation omitted]). Respondents do not dispute that the Legislature's authority to enact retroactive laws is substantially constrained (see Alliance, 77 NY2d at 585- 586). Nor do they dispute that where, as here, a statute retroactively impairs vested rights, a rational basis for the law simply is not enough to sustain it (id at 586; see Matter of Hodes v Axelrod, 70 NY2d 364, 369-370 [1987]; Franza v Olin, 73 AD3d 44, 46 [4th Dept 2010]). "This doctrine reflects the deeply rooted principles that persons should be able to rely on the law as it exists and plan their conduct accordingly and that the legal rights and obligations that attach to completed transactions should not be disturbed" (Alliance, 77 NY2d at 586). Indeed, "[t]he integrity of the State government, upon which the public is entitled to rely, requires, at the very least, that the State keep its lawfully enacted promises" (id at 577). This Court and the Third Department have previously concluded that Petitioner's right to reimbursement for overburden local share payments is a vested right. In County of Herkimer v Daines (60 AD3d 1456 [4th Dept 2009]), for example, this Court acknowledged that "petitioner had rendered services in accordance with the law in existence at the time, and those transactions were complete" (id at 1457). This Court also, in County of Niagara v Daines, explicitly held that the 2010 Amendment could not be construed to defeat Respondents' "preexisting duty to 21 reimburse petitioner for the overburden expenditures" because the statute, like Chapter 56, part D of the 2012 Executive Budget Bill here, '"shall not be construed to alter, change, affect, impair or defeat any rights, obligations, duties or interests accrued, incurred or conferred prior to the effective date of this act"' (County of Niagara v Daines, 91 AD3d at 1289, quoting L 2010, ch 109, part B, § 40[c]; see also L 2012, ch 56, part D, § 65[k] [using precisely the same language to preserve vested rights]; County of St. Lawrence v Shah, 95 AD3d at 1553 ["(s)ince the state was never entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, [could not] serve to transform these county funds into state property and relieve the state of the legal obligation to return them" (emphasis added)]). Similarly, in St. Lawrence !, the Third Department explained that "petitioner's right to reimbursement for (Medical Assistance) expenditures accrued" "prior to 2006, upon payment to DOH for services provided to overburdened patients for which no local share was owing" (County of St. Lawrence v Daines, 81 AD3d at 216 [emphasis added]). This Court relied on St~ Lawrence I when it held that the State's retroactive application of an amendment to the Empire Zone Act violated the plaintiff's due process rights (see James Sq. Assoc. LP v Mullen, 91 AD3d 164, 172 [4th Dept 2011 ]). Thus, at a minimum, this Court has interpreted St. Lawrence I as establishing a county's constitutionally protected right in pre-2006 overburden reimbursement. Social Services Law § 368-a(l)(h) provides Petitioner with an immediate property interest in the reimbursement owed by Respondents. Section 61 now purports to retroactively deprive Petitioner of these reimbursements. Just as this Court and the Third Department have held with respect to the 2010 Amendment, however, Section 61 cannot now "transform these county funds into state property and relieve the state of the legal obligation to return them," because the State "was never entitled to these funds" in the first place (County of St. Lawrence v Shah, 95 AD3d at 1553 (emphasis added]). Accordingly, Respondents' reliance on Section 61 to 22 deprive Petitioner retroactively of its vested right to reimbursement must fail (see id). Additionally, numerous courts throughout the State have recently held just that, including the Supreme Courts in Broome County, Cayuga County, Chemung County, Genesee County, Jefferson County, Monroe County, Oneida County, and St. Lawrence County (see Addendum). New York precedent fully supports these courts' recent holdings, as New York courts consistently uphold vested rights against retroactive abrogation in circumstances similar to this case. For example, in Alliance, the Court of Appeals invalidated an amendment to the Insurance Law because the amendment retroactively deprived the plaintiffs-a number of insurance companies, trade associations, and individual insurance policy holders-of their constitutionally protected "property rights" in the earnings of a statutorily-created Property and Liability Insurance Security Fund to which they had previously contributed (77 NY2d at 577-578). Specifically, the Court held that, with respect to "contributions already made," the State could not extinguish the contributors' property rights by "repealing the provision which [gave] rise to [them]" (id. at 585). Respondents concede that that is precisely what Section 61 purports to accomplish, and thus it too must fail (see James Square Associates LP, 21 NY3d at 250; Caprio v New York State Department of Taxation and Finance, 117 AD3d 168, 178 [1st Dept 2014) [holding that retroactive application of amendments to Tax Law violated plaintiffs' due process rights]). B. Petitioner's Vested Rights to Overburden Reimbursement Are Not Subject to Retroactive Impairment. To avoid the clear retroactive deprivation of Petitioner's vested rights, Respondents argue that the balance of factors weighs in favor of Section 61 's constitutionality because (1) Petitioner should have calculated and submitted reimbursement claims, notwithstanding: (i) Social Services Law § 368-a's clear language placing the burden solely on Respondents; (ii) the Third 23 Department's unambiguous holding in St. Lawrence I that Petitioner was not required to do so; and (iii) Respondents' admission that they could not calculate the "unknown and unknowable" liability themselves (R 411, 427-428, 430); (2) the benefits that Petitioner has purportedly received since 2006 under the Medicaid Cap Statute somehow make up for the pre-2006 overburden reimbursements that Respondents unlawfully withheld from Petitioner for approximately three decades and the continuing benefits Respondents receive at Petitioner's expense due to Respondents' refusal to properly code overburden individuals to this very day (R 421-423); (3) allowing Petitioner to collect both the post-2006 Cap "benefits" and pre-2006 unpaid overburden reimbursements would result in a supposed windfall; ( 4) Petitioner misinterpreted the law regarding its statutory right to reimbursement, notwithstanding that numerous courts, including this Court, repeatedly confirmed Petitioner's interpretation and rejected Respondents' attempts to avoid the State's longstanding and undisputed reimbursement debt, and Petitioner should have assumed that the Legislature would eventually succeed in extinguishing its vested rights retroactively; and (5) the State's interest in fiscal certainty-that is, allowing it to extinguish its outstanding debts by legislative fiat whenever it no longer desires to pay-outweighs Petitioner's right to reimbursement (Resps' Br., at 22-32). As set forth below, under the factors articulated in Alliance, Respondents' assertions are without merit. 1. Section 61 is Manifestly Unfair. The fairness factor significantly favors Petitioner. Petitioner has been deprived of reimbursements that it was statutorily entitled to receive, solely due to Respondents' actions. During the six years in which Respondents contend that Petitioner should have taken some action - 2006 to 2012 - Respondents did not voluntarily pay a single overburden reimbursement claim (R 489-490, 816-818). Respondents admit that, during that same six year period, despite being made aware of the improper coding on their computer system, they did nothing to ascertain the 24 amount owed to Petitioner and the other counties, let alone fully satisfy their statutory duty to reimburse Petitioner and the counties (R 425-427). Thus, it was only due to Respondents' own failures that Petitioner's rights were impacted by Section 61. Moreover, the purported post-2006 benefits manufactured by Respondents are entirely irrelevant to the reimbursements Respondents owe to Petitioner under Social Services Law § 368-a for pre-2006 overburden payments improperly taken by Respondents. As explained more fully below, the Medicaid Cap Statute, which did not become effective until January 2006, is a prospective statute that affects only the manner in which Respondents' post-2006 obligations to Petitioner are paid (see Point II [BJ[3], infra). Respondents' pre-2006 obligations to Petitioner remain governed by Social Services Law§ 368-a-a statute that was adopted in 1984 and has not been repealed by Section 6 J. Therefore, as this Court already held in County of Herkimer v Daines, the Medicaid Cap Statute only impacts Petitioner's ability to submit claims to recoup overburden payments made after January l, 2006, when the Medicaid Cap Statute became effective (see County of Herkimer v Daines, 60 AD3d at 1457). Respondents' reliance on the purported benefit of the Medicaid Cap Statute also is misplaced since there is no dispute that they failed to include the unpaid overburden reimbursement in Petitioner's 2005 base year Medicaid Cap calculation. This means that, from the implementation of the Medicaid Cap in 2006 to date, Petitioner has paid significantly more than it should have in Medical Assistance expenses each year and will continue to do so unless and until the cap is properly recalculated (R 476-480, 484-485). Respondents will continue to receive the annual benefit of the miscalculation regardless of this Court's decision regarding the pre-2006 reimbursement. Respondents have further benefitted, at the expense of Petitioner and the counties, by failing to credit Petitioner and the counties with an enormous sum of overburden reimbursement accruing each year to date. Again, both of these windfalls could be remedied by 25 a simple program to identify and properly code overburden recipients. Respondents chose not to fix that problem. Respondents' contention that Petitioner purportedly receives certain protections under the Cap Statute that render Section 61 "fair" is entirely irrelevant. For example, Respondents assert that the Cap "shields" Petitioner from contributing to judgments rendered in favor of providers (Resps' Br., at 24-25). Respondents fail to cite any authority in support of this statement which, in any event, is a completely speculative benefit that could not possibly compensate Petitioner and the counties for the millions that Respondents have unlawfully withheld. Respondents' further suggestion that the legislative process leading up to the enactment of Section 61 was all the process due to Petitioner is simply incredible. First, there is absolutely no proof in the record to support Respondents' contention that Petitioner and other counties "lobbied vigorously against the 2012 amendment" (Resps' Br., at 26). Second, Respondents' contention that, in a two and a half month period between introduction and enactment, Petitioner and the other counties could have somehow identified all overburden-eligible individuals for whom they were not reimbursed and used this infonnation to submit unnecessary claims to DOH (Resps' Br., at 28-29), wholly ignores Respondents' (1) own contention that these reimbursements are purportedly "unknown and unknowable" (R 411 ); (2) repeated complaints regarding the burdens of calculating these amounts (R 426-427); (3) failure to accomplish this task despite having approximately thirty years to do so; and ( 4) vigorous denial of all such reimbursement claims during that two-and-a-half-month period. Third, the Court of Appeals has already rejected Respondents' exact argument, holding that the time period between legislation's passage and effective date cannot serve as a grace period to satisfy the strictures of due process (see Gilbert v Ackerman, 159 NY I 18, 123-124 [1899]). In order to provide constitutionally adequate due process before a retroactive deprivation 26 of Petitioner's vested rights to overburden reimbursement, Section 61 was required, at the very least, to provide a reasonable grace or limitations period (e.g., one year) for submission of claims qfter it became effective (see Brothers v Florence, 95 NY2d 290, 30 l [2000] ["Where, as here, however, there is no legislatively prescribed grace period, a court may uphold the constitutional validity of the retrospective application of the new statute by interpreting it as authorizing suits upon otherwise time-barred claims within a reasonable time after the statute 's effective date" (emphasis added)]). Section 61 did no such thing. Instead, it barred Petitioner's claims for reimbursement immediately when it became effective. Respondents' unsupported claim that due process has been satisfied because Petitioner purpotiedly has been able to submit the allegedly "stale" claims for reimbursement since the 1990s (Resps' Br., at 22-23), similarly should be rejected. Respondents again attempt to improperly shift their clear statutory burden of reimbursement onto Petitioner. As the Third Department expressly recognized in St. Lawrence I, Petitioner had no obligation to submit claims for reimbursement, and has only been compelled to do so due to the State's failures (see County of St. Lawrence v Daines, 81 AD3d at 218 n 2). Moreover, Respondents have delayed for decades in calculating and paying the reimbursement indisputably owed to Petitioner, and were the only ones capable of actually identifying the dropped codes, uncoded recipients, and unpaid reimbursement in the first place (R 456-457, 476-477, 880-881). Thus, absent identification by Respondents of the uncoded individuals and disclosure of the relevant records, it was impossible for Petitioner and the counties to identify all the unpaid overburden reimbursement. It also should be noted that Respondents made this precise argument-that Petitioner should have previously submitted its reimbursement claims-in St. Lawrence I. In that case, the Third Department rejected Respondents' argument that St. Lawrence County had failed to timely submit its reimbursement claims (see County of St. Lawrence v Daines, 81 AD3d at 218). In 27 support of their timeliness argument in St. Lawrence I, Respondents submitted the Affidavit of Nicholas Meister sworn to December 3, 2009 (the "Meister Affidavit"). A copy of the Meister Affidavit is included in this record on appeal (R 987-1005). When the Meister Affidavit (R 994- 996) is compared to the Affidavit of Robert LoCicero sworn to September 26, 2013 and submitted in the instant proceeding (the "LoCicero Affidavit") (R 417-419), it is clear that Respondents' argument in this proceeding as to the counties' purported ability to identify unreimbursed overburden expenditures and the alleged "staleness" or timeliness of the reimbursement claims is identical to the argument previously asserted in St. Lawrence I. 2. Petitioner Properly Relied on Its Clear Entitlement to Overburden Reimbursement Under Social Services Law§ 368-a. The reliance factor similarly weighs heavily in Petitioner's favor. Reliance is analyzed at the time the local share payments were made by Petitioner to Respondents. Prior to 2006, it was entirely reasonable for Petitioner to rely on the plain language of Social Services Law § 368-a, which expressly states that Respondents shall reimburse Petitioner for all overburden local share payments (see Social Services Law§ 368-a[l][h][i]). Petitioner's interpretation of the law was repeatedly confirmed by this Court and the Third Department (see County of St. Lawrence v Shah, 95 AD3d at 1553; County of Niagara v Daines, 91 AD3d at 1289; County o,fSt. Lawrence v Daines, 81 AD3d at 216; County of Herkimer v Daines, 60 AD3d at 1457). Thus, Respondents' contention that Petitioner had "ample forewarning that its claims might be extinguished" (Resps' Br., at 27) is meritless. In any event, it would not have been reasonable at any time for Petitioner to expect that the State, after taking the overburden local share payments, would simply refuse to pay its creditors. The State lacks the authority to simply abrogate its own debts whenever it determines it no longer desires to pay them, especially when doing so deprives Petitioner of its vested rights 28 to reimbursement (see e.g. O'Neil vState of New York, 223 NY 40, 43-44 [1918]; see also Rhem v Malcolm, 507 F2d 333, 341 n 20 [2d Cir 1974]). Respondents cannot justify this unabashed attempt to extinguish their prior debts to Petitioner by citing their own erroneous interpretations of the Medicaid Cap Statute and 2010 Amendment, which were properly rejected by all courts that have considered them. Respondents' suggestion that, to avoid their own baseless attempts to eradicate the State's overburden reimbursement liability, Petitioner should have submitted reimbursement claims simply defies logic. As the Third Department explicitly recognized, Petitioner had no obligation to submit claims, or to take "any action to receive reimbursement for overburden expenses" from DOH (see County of St. Lawrence v Daines, 81 AD3d at 214 [emphasis added]). In fact, DOH's Deputy Director for Administration admits that Petitioner has no obligation to submit reimbursement claims (R 427). Respondents admit, instead, that it was their responsibility to "identif[y] those Medicaid recipients who were mentally disabled under the applicable overburden criteria" (R 415, 427, 443). Respondents have failed to satisfy this responsibility for decades and, in fact, still have no intention of doing so, to the further expense of Petitioner and the counties (see R 426-429). Even if it was Petitioner's duty to calculate the reimbursements and submit claims (which it is not), Petitioner was never provided with all the infonnation it would need from DOH in order to make these calculations and, due to Respondents' suspension of claim processing in April 2005, Petitioner effectively was denied the opportunity to submit reimbursement claims (R 130). Simply stated, Petitioner's actions or inactions since 2006 are irrelevant. Since 2005, there has not been a single instance when Respondents paid an overburden reimbursement claim without being compelled to do so through litigation, including during the two and a half months between Section 61 's proposal and effective date that Respondents tout as a "grace period." 29 Thus, Petitioner's reliance on the express reimbursement obligation contained in Social Services Law § 368-a, which still has not been repealed to date, when paying the overburden local share payments to Respondents prior to 2006 was entirely reasonable. 3. The Extent of Section 61 's Retroactivity is Excessive. Respondents assert that Section 61 is a prospective amendment because it bars claims submitted after April 1, 2012. This argument is incredible in light of Respondents' persistent arguments that Section 61 is and was intended to be expressly retroactive, and seeks to deprive Petitioner and other counties, in 2012, of reimbursement for payments taken and concealed by Respondents as far back as 1984 (R 424, 427). Inasmuch as Respondents argue that Section 61 extinguishes over 30 years of overburden reimbursement liability, it is unquestionably significantly retroactive. Respondents seek to avoid the expressly retroactive language of Section 61 by claiming that it merely "clarifies" that the Medicaid Cap-a wholly separate statute, which first went into effect on January 1, 2006-retroactively extinguishes Petitioner's vested right to reimbursement for overburden payments taken by Respondents prior to January 1, 2006 (Resps' Br., at 29-31). To "clarify," however, means to make plain something that already exists, but is ambiguous (see Merriam-Webster's Collegiate Dictionary, at 228 [11th ed 2004] [defining "clarify" as "to free of confusion" or "to make understandable"]). The Legislature cannot "clarify" that, contrary to the holdings of this Court and the Third Department, the Medicaid Cap Statute is retroactive when the statute was not made retroactive in the first instance. By its very terms, the Medicaid Cap Statute is effective as of January 1, 2006 and, therefore, applies only to expenditures incurred from January 1, 2006 forward (see Dorfman v Leidner, 76 NY2d 956, 959 [J 990]). The statute contains no language, much less a clear expression of intent, indicating that it should be applied retroactively, nor does it even mention 30 the overburden obligation. In fact, the Medicaid Cap Statute is loaded with prospective terms indicating that it can only be applied going forward (see e.g. L 2005, ch 58, part C, § l[c] "[c]ommencing with the calendar year beginning January 1, 2006, calendar year social services district medical assistance expenditure amounts for each social services district shall be calculated by multiplying the results of the [cap] calculations" [emphasis added]). Further, in the prior overburden litigations, this Court and the Third Department extensively analyzed this language and the legislative history underlying the Medicaid Cap Statute, and each time concluded, contrary to Respondents' suggestion, that the prior enactment was not intended to retroactively deprive Petitioner of its vested right to reimbursement (see County of St. Lawrence v Daines, 81 AD3d at 215; County of Herkimer v Daines, 60 AD3d at 1457). In fact, all of the courts that have considered the language and legislative history of the Medicaid Cap Statute have reached the same conclusion: the Medicaid Cap Statute did not supplant the provisions of Social Services Law § 368-a as it pertains to overburden payments made prior to 2006. Respondents do not, and cannot, point to any language or legislative history of the Medicaid Cap Statute that supports their post-hoc argument in this proceeding that a retroactive impairment of Petitioner's vested rights to reimbursement was intended all along (see A1atter of Thomas v Bethlehem Steel Corp., 63 NY2d 150, 154-155 [1984] [after reviewing the legislative history, and finding an "absence of clear legislative indication that the statute be applied retrospectively," determining that statute should not be given retroactive application]). Instead, Respondents solely rely on the legislative history of Section 61, a separate statute, to support their interpretation. As a result, even if Respondents' contention that Section 61 is a "clarifying amendment" were correct (which it is not), Respondents' position still fails. A "'clarifying' amendment ... cannot retroactively declare a different legislative intent contrary to the plain meaning of the earlier law" (Bo/tja v Southside Hosp., 186 AD2d 774, 775 31 [2d Dept 1992]; see also Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293, 304 (1961]; Matter of Island Waste Servs., Ltd. v Tax Appeals Trib. of State ofN. Y., 77 AD3d 1080, 1083 n 2 (3d Dept 2010], lv denied 16 NY3d 712 (2011]). Respondents suggest that the Legislature's Memorandum in Support of Section 61 indicates that the intent of Section 61 was to "clarify" that the Legislature previously extinguished Petitioner's statutory right to reimbursement. The Legislature's purported "clarification," however, is entirely inconsistent with the intended prospective application of the Medicaid Cap Statute; as such, Section 61 cannot have merely "clarified" the Legislature's original intent. Thus, the Legislature's belated pronouncement of its purported prior intent in support of Section 61 is wholly ineffective to change the plain, unambiguous language of the Medicaid Cap Statute (see Roosevelt Raceway, 9 NY2d at 304 ["(t)he Legislature has no power to declare, retroactively, that an existing statute shall receive a given construction when such a construction is contrary to that which the statute would ordinarily have received"]; Boltja, 186 AD2d at 775; Island Waste Servs., 77 AD3d at 1083 n 2). Moreover, even assuming, arguendo, that Respondents were correct that Section 61 is a clarifying amendment (which, again, it is not), Section 61 would overturn this Court's precedent, and the precedent of numerous courts across the state, merely to clarify that the Medicaid Cap Statute unconstitutionally deprives Petitioner of its preexisting rights to reimbursement under Social Services Law § 368-a. Notably, Respondents do not, and cannot, point to any case where an amendment clruifying that a prior statute was intended to abrogate a preexisting right has been upheld as constitutional. Under Respondents' construction, the Medicaid Cap Statute fares no better than Section 61, because the Medicaid Cap, which went into effect on January 1, 2006, also would retroactively impair Petitioner's vested rights to reimbursement for overburden payments made prior to that date. As this Court and the Third Department have held, at the time that the Medicaid Cap went into effect, Petitioner's right to reimbursement under Social Services 32 Law § 368-a had already vested (see County of St. Lawrence v Daines, 81 AD3d at 216; County of Herkimer v Daines, 60 AD3d at 1457). Therefore, even if Section 61 merely clarifies that the Meilicaid Cap Statute unconstitutionally impairs Petitioner's vested rights to reimbursement for overburden payments, Section 61 cannot have a rational basis and should be invalidated by this Court. 4. The Public Interest Requires Reimbursement of the Improperly Retained Overburden Payments to Petitioner. Without citing any legal authority, Respondents claim that the purported public interest served by the law is to provide the State with certainty that it can avoid its overdue debts (see Resps' Br., at 31-32). There is no authority in snpportofthis purported interest because it is not the type of overriding public interest that is compelling enough to deprive Petitioner of its constitutionally protected property rights. To the contrary, the Court of Appeals recently held that the State's budgetary concern is not a "valid public purpose" for retroactive application of a statute (James Sq. Assoc., 21 NY3d at 249-250; see also Caprio, 117 AD3d at 178). In fact, permitting Respondents to avoid their clear statutory obligation to reimburse Petitioner would disserve the public interest, because it would encourage DOH and other agencies to (1) avoid timely compliance with their statutory obligations; (2) engage in dilatory tactics, including intenninable litigation, to . frustrate these obligations; and (3) lobby the Legislature to retroactively chauge any statutes with which they do not wish to comply, without providing auy notice to those affected, in hopes that the agencies could ultimately avoid their obligations entirely. In order to serve the true public interest here, Respondents must be compelled to reimburse Petitioner's overburden payments to the county taxpayers from whom they were improperly taken. Thus, inasmuch as the balauce of the factors set forth in Alliance weighs 33 heavily in favor of preserving Petitioner's vested rights against Section 61 's attempt at retroactive extinguishment, this Court should declare Section 61 unconstitutional and affirm Supreme Court's Order and Judgment. POINT III SUPREME COURT PROPERLY COMPELLED RESPONDENTS TO REIMBURSE PETITIONER PURSUANT TO SOCIAL SERVICES LAW § 368-A Supreme Court, Jefferson County properly compelled Respondents to reimburse Petitioner pursuant to Social Services Law § 368-a. Even if Supreme Court did not declare Section 61 unconstitutional, however, this relief would still be warranted as a matter of statutory construction, pursuant to General Construction Law § 93, and pursuant to the special facts exception doctrine. A. The Plain Language of Section 61 Does Not Extinguish Respondents' Underlying Reimbursement Obligation. Section 61 does not extinguish Respondents' obligation, under Social Services Law § 368-a(l )(h), to reimburse Petitioner for the overburden local share payments taken prior to January l, 2006. That obligation is still in place. Section 61 merely states that Respondents are no longer required to reimburse Petitioner for "claims submitted on and after the effective date of [Section 61], for district expenditures incurred prior to January 1, 2006" (L 2012, ch 56, part D, § 61 [emphasis added]). Had the Legislature intended to eliminate Respondents' reimbursement obligation, it could have repealed Social Services Law § 368-a(l)(h), or used language that expressly eliminated this obligation. It chose not to do so, however, and instead chose language that merely cut off Petitioner's right to receive payment for submitted claims. "The repeal of a statute by implication is not favored by law, for when the legislature intends to repeal an act it usually says so expressly" (Pines v State of New York, 115 AD3d 80, 97-98 [2d Dept 2014], appeal dismissed 23 NY3d 982 [2014], quoting Matter of Tiffany, 179 NY 34 455, 457 [I 904]). "The absence of an express provision in a later statute, for repeal of an earlier one, gives rise to a presumption that repeal was not intended" (Cimo v State of New York, 306 NY 143, 148-49 [1953]). "If by any fair construction, both statutes can be given operation, implied repeal will not be declared" (Pines, 115 AD3d at 98, quoting Cimo, 306 NY at 149). The language of Section 61 can and should be construed as merely terminating the reimbursement claims process, which Respondents temporarily suspended in April 2005 (R 467), but otherwise leaving Respondents' reimbursement obligation intact. The Memorandum in Support of Section 61 supports this interpretation, explaining that "Section 61 of the bill would . . . clarify that local governments cannot claim for overburden expenses incurred prior to January 1, 2006" (R 451 [emphasis added]). Nothing in the Memorandum suggests that, by adopting Section 61, the Legislature intended to repeal Social Services Law § 368-a(I )(h), or to terminate Respondents' reimbursement obligation. Respondents failed to submit any evidence to the contrary, and have in fact conceded that Section 61 was intended only "to 'wall-off any further potential liability for overburden reimbursement claims that were submitted on or after the provision's effective date of April 1, 2012" (R 424 [emphasis added]). That the legislative history states that Section 61 was purportedly intended to address "adverse court decisions" is irrelevant, since the Legislature lacks the authority to adopt a clarifying amendment to "declare a different legislative intent contrary to the plain meaning of the earlier law" (Boltja, 186 AD2d at 775; see also Matter of Roosevelt Raceway, 9 NY2d at 304; Matter of Island Waste Servs., Ltd., 77 AD3d at I 083 n 2). As the Third Department has expressly confirmed, Petitioner has absolutely no obligation to submit claims for overburden reimbursement (see County of St. Lawrence v Daines, 81 AD3d at 218 & n 2; see also R 879 [stating that DOH voluntarily credited Westchester County in 2003 for known, unpaid overburden reimbursement going back to at least 1998]). In fact, Petitioner 35 "need not take any action to receive reimbursement for overburden expenses" (County of St. Lawrence v Daines, 81 AD3d at 218 & n 2 [emphasis added]). Accordingly, elimination of the claims submission process does not in any way alter Respondents' underlying duty to reimburse Petitioner. Any other construction of Section 61 forces the reader to conclude that Section 61 not only implicitly repeals Social Services Law § 368-a(l )(h ), but also unconstitutionally impairs Petitioner's vested rights. Thus, Petitioner's interpretation of Section 61 also is consistent with the construction expressly intended by the Legislature-that it "shall not be construed to alter, change, affect, impair or defeat any rights, obligations, duties or interests accrued, incurred or conferred prior to the effective date of this act" (L 2012, ch 56, part D, § 65(k]). Significantly, in County of Niagara v Daines, this Court rejected Respondents' construction of the 2010 Amendment to "defeat[ ] their preexisting duty to reimburse petitioner for the overburden expenditures" because this precise language unambiguously preserved Petitioner's preexisting rights (91 AD3d at 1289). Respondents' construction of Section 61 here flatly ignores that portion of this Court's decision and, thus, similarly fails (see Matter of Monroe County Pub. School Dists. v Zyra, 51 AD3d 125, 131 [4th Dept 2008] ("the rules of statutory construction require that we avoid rendering statutory language superfluous"], Iv denied 52 AD3d 1293 [4th Dept 2008]). Therefore, even if Section 61 is upheld as constitutional (which it should not be), this Court should compel Respondents to fulfill their clear reimbursement obligation under Social Services Law § 368-a, by calculating the total reimbursement liability owed to Petitioner and reimbursing Petitioner for the full amounts owed, including the amounts identified in these proceedings. 36 B. Section 61 Retroactively Deprives Petitioner of its Vested Property Right to Reimbursement in Violation of General Construction Law § 93. As the Third Department held in St. Lawrence !!, General Construction Law § 93 protects Petitioner's right to reimbursement for overburden local share payments taken prior to 2006, notwithstanding the State's attempts to legislate away that right (see County of St. Lawrence v Shah, 95 AD3d at 1553-1554). This is especially true here, where Respondents assert that Section 61 effectively repeals Social Services Law§ 368-a's reimbursement obligation for those payments, notwithstanding that Petitioner's rights under that statute vested long before the enactment of Section 61 (see General Construction Law § 93 ["The repeal of a statute or part thereof shall not affect or impair any ... right accruing, accrued or acquired ... prior to the time such repeal takes effect"]; County of St. Lawrence v Shah, 95 AD3d at 1553-1554; County of St. Lawrence v Daines, 81 AD3d at 216; County of Herkimer v Daines, 60 AD3d at 1457). Thus, because Petitioner's right to reimbursement vested long before Section 61 was enacted to purportedly extinguish that right, General Construction Law § 93 preserves Petitioner's entitlement to reimbursement in its entirety. Application of General Construction Law § 93 is especially appropriate in this case because Respondents argue that Section 61 repeals the entire reimbursement obligation contained in Social Services Law § 368-a by implication. Indeed, it cannot be disputed that Respondents' interpretation of Section 61, if adopted, would have wide-ranging repercussions on Petitioner's vested rights to reimbursement. In fact, under Respondents' impermissibly expansive view, Petitioner would be deprived of reimbursement for all pre-2006 overburden payments taken by Respondents, simply because Respondents unlawfully failed to comply with their statutory reimbursement duty in the first instance and now do not wish to pay (R 424-425). This Court can avoid that impennissible result, and satisfy the directive of General 37 Construction Law§ 93, however, by adopting Petitioner's reasonable interpretation of the plain language of Section 61-that Section 61 bars only the payment of reimbursement claims, and not Respondents' underlying reimbursement obligation. In so doing, Petitioner's vested rights to the overburden reimbursements are preserved and the purpose of General Construction Law § 93 is satisfied. As the Third Department held in St. Lawrence JI, this Court should construe Section 61 pursuant to General Construction Law § 93 to prevent the State from unilaterally legislating away its undisputed reimbursement debt to Petitioner (see County of St. Lawrence v Shah, 95 AD3d at 1553-1554). Thus, even if this Court holds that Section 61 is constitutional, the portions of the Supreme Court judgment compelling Respondents to reimburse Petitioner, granting mandamus relief, and ordering Respondents to calculate and pay the total owed reimbursements, should be affirmed. C. Alternatively, the Special Facts Exception Bars Respondents from Relying on Section 61 to Deny Petitioner's Overburden Reimbursement Claims. Although a court generally must decide a case based on "the Jaw as it exists at the time of the decision" (Matter of Pokoik v Silsdorf, 40 NY2d 769, 772 [1976]), a "court may deny an agency the benefit of a change in the law when it has intentionally or even negligently delayed action ... until after the Jaw ha[s] been amended" (Lawton, 128 AD2d at 206, quoting Matter of Faymor Dev. Co. v Board of Stds. & Appeals of City of NY., 45 NY2d 560, 565 [1978)). Importantly, "[e]ven in the absence of bad faith, administrative procrastination of [a large] magnitude, be it negligent or willful, without excuse or justification, affords a basis for applying the pre-existing [provision]" (Matter of Amsterdam-Manhattan Assoc. v Joy, 42 NY2d 941, 942 [ 1977] [emphasis added]). This doctrine, known as the "special facts" exception, "is based upon equity, not constitutional principles[,]" and is plainly applicable in this case based on 38 Respondents' decades-long delay and dilatory tactics to avoid their reimbursement obligations (Lawton, 128 AD2d at 206). The evidence that Respondents employed dilatory tactics leading up to the enactment of Section 61 is undisputed. Specifically, Respondents: (1) failed to properly code overburden recipients (R 473-4 79, 818-819); (2) failed to notify Petitioner which overburden recipients were not properly coded (R 476-477); (3) refused to recode overburden-eligible individuals after numerous courts pointed out Respondents' failures to pay reimbursements for those individuals (R 474-475); (4) refused to calculate the total amount of overburden reimbursements owed to Petitioner (R 426-428); (5) refused to reimburse Petitioner for the overburden payments Respondents admit have been owed for decades (R 424-427); (6) directed OTDA to suspend processing or payment of overburden reimbursements claims (R 467); (7) sought to avoid and ultimately denied those reimbursement claims that Petitioner could identify (R 398, 423-425); (8) refused to disclose critical documentation necessary for Petitioner to finally identify and verify the unpaid overburden reimbursement (R 134-137, 194-209, 339-340, 480-481); see also Matter of County of St. Lawrence v New York State Dept. of Health, Sup Ct, St. Lawrence County, June 20, 2013, Demarest, J., Index No. CV-2012-0140252 [included in attached Addendum]); (9) advocated for statutory amendments that attempt to improperly eradicate their duties retroactively (R 423-425); and (J 0) refused to recalculate the 2005 base year Medicaid Caps for Petitioner and the other counties (R 483-486). Respondents do not dispute, and often concede, that they took many of these actions, which resulted in the State improperly retaining millions of dollars of county funds contrary to the express dictates of Social Services Law § 368- a (R 423-426). Indeed, Respondents have yet to explain how they simply failed to reimburse the counties an estimated $180 million in improperly taken overburden payments (R 256). 39 Respondents' dilatory conduct extends well beyond the undisputed facts described above. From 2006 through April 2012, Respondents also forced the counties to litigate their rights to unpaid overburden reimbursement even though Respondents admitted the reimbursement was due and owing. As discussed above, the litigation resulted in nine appellate decisions, all of which directed Respondents to fulfill their statutory obligation. The litigation continued until after Section 61 was effective, which means that, from at least 2006 through April 1, 2012, there was not a single instance where Respondents voluntarily reimbursed Petitioner and the counties for improperly taken overburden payments. Based upon the undisputed facts relating to Respondents' failure to properly reimburse Petitioner, their efforts to conceal this failure and the six years of extensive litigation leading up to the enactment of Section 61, Petitioner respectfully submits that Respondents' actions were, at a minimum, negligent. Accordingly, even if this Court determines that Section 61 is constitutional (which it should not), it should alternatively hold that Respondents are precluded from relying on Section 61 as a basis to avoid the State's longstanding and undisputed debt to Petitioner (Lawton, 128 AD2d at 206; see Amsterdam-Manhattan Assoc., 42 NY2d at 942; Matter ofCifone v Aiello, 179 AD2d 876, 877 [3d Dept 1992); see also Matter of Mamaroneck Beach & Yacht Club, Inc. v Zoning Bd. of Appeals of Vil. of Mamaroneck, 53 AD3d 494, 497 [2d Dept 2008], lv denied 11 NY3d 712 [2008]; Matter of Miller v Southold Town, 190 AD2d 672, 673 [2d Dept 1993)). POINT IV SUPREME COURT PROPERLY COMPELLED RESPONDENTS TO CALCULATE AND PAY ANY REMAINING OVERBURDEN REIMBURSEMENT DUE UNDER SOCIAL SERVICES LAW§ 368-A Supreme Court properly granted mandamus compelling Respondents to finally satisfy their unilateral reimbursement duty under Social Services Law § 368-a. Notwithstanding 40 Respondents' characterization of Supreme Co mt' s direction, the judgment does not compel Respondents to undertake any specific method for satisfying their statutory reimbursement obligation, nor does it compel Respondents to establish a particular amount owed to Petitioner or to reach a specific conclusion. It simply requires Respondents to forgo any further dilatory tactics, fulfill their statutory duty, and resolve the outstanding overburden reimbursement liability to Petitioner once and for all. Supreme Court's mandamus remedy is fully consistent with Respondents' statutory obligations under Social Services Law§ 368-a. Respondents' argument that the method by which DOH determines overburden reimbursement involves the exercise of discretion misconstrues the process. Respondents' obligation to determine overburden eligibility prior to paying Petitioner's claims is in no way discretionary. Instead, according to DOH's own Medicaid Reference Guide Manual, Respondents must find that an individual is overburden-eligible if he or she meets one of four specifically defined criteria (R 298-299). Simply put, once the factual predicate for overburden eligibility is established as provided under the Medicaid Reference Guide Manual, reimbursement is necessary and Respondents have absolutely no discretion to avoid it (see Social Services Law § 368-a[l][h][i] ["(t)here shall be paid to each such district ... " (emphasis added)]; see also Matter of County of Fulton v State of New York, 76 NY2d 675, 678 [1990] [granting mandamus to compel payment of assessments where statute expressly provided that assessments "shall be paid by the river regulating district"]). Finally, in order to convince this Court that their statutory reimbursement duty is far too burdensome to complete, Respondents assert that payment of the State's undisputed overburden reimbursement debt to Petitioner "could cause the Medicaid program to exceed the global spending cap on state Medicaid expenditures," which could have impacts on Medicaid providers and recipients (Resps' Br., at 37). This last gasp policy argument cannot have any legal impact 41 on Petitioner's clear entitlement to the mandamus relief ordered by Supreme Court, and, in any event, is wholly without merit. As Respondents acknowledge, the global spending cap on state Medicaid expenses is a ceiling that is placed on the total amount of Medicaid expenditures for services provided to Medicaid-eligible recipients that the State may incur during a given fiscal year (see L 2011, ch 59, part H, § 92[1]). The overburden reimbursement liability owed to Petitioner derives from expenditures for services that were performed prior to January 1, 2006 (see Social Services Law§ 368-a[l][hJ) and, therefore, payment of the reimbursements will not in any way cause the Medicaid program to exceed the global spending cap in the current fiscal year, as Respondents suggest. POINTY SUPREME COURT ERRONEOUSLY DENIED PETITIONER'S CLAIMS FOR UNJUST ENRICHEMENT, CONVERSION, AND CONSTRUCTIVE TRUST Although Supreme Court acknowledged that Petitioner established each of its causes of action for unjust enrichment, conversion, and constructive trust, the Court nonetheless denied those claims based on the mistaken premise that they may not be asserted against the State or any of its agencies (R 80-84). Respondents, however, are not immune from tort liability for their refusal to reimburse Petitioner for the overburden local share payments drawn from county funds that Respondents unlawfully retained for their own use (see e.g. Parsa v State of New York, 64 NY2d 143, 148 [1984] [collecting cases]; Ford Motor Credit Co. v State of New York, 2 I 9 AD2d 202, 204 [3d Dept 1996] [constructive trust], lv denied 88 NY2d 813 (1996] ; Robert R. Gibbs, Inc. v State of New York, 70 AD2d 750, 750 [3d Dept 1979] [conversion]; Esposito v State of New York, 35 Misc 3d 1216(A), *4 [Ct Cl Dec. 27, 201 l] [conversion], affd 112 AD3d 1006 [3d Dept 2013]; 230 Park Ave. Assoc. v State of New York, 165 Misc 2d 920, 923, 926 [Ct Cl 1995] [unjust enrichment]). As demonstrated below, because Petitioner satisfied each of the elements 42 of these claims, this Court should reverse that portion of the Supreme Court Order that denied Petitioner's Fifth, Sixth, and Seventh causes of action, and grant Petitioner relief on those claims (cite). A. Respondents are Liable for Conversion. Respondents' unlawful retention of Petitioner's reimbursements is a textbook case of conversion. Instead of reimbursing the funds to Petitioner, which were raised through county property and sales taxes, Respondents retained the overburden local share payments for their own benefit, contrary to the express dictates of Social Services Law § 368-a Respondents are therefore liable for conversion. As the Court of Appeals has held, conversion is "the 'unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights"' (Thyroff v Nationwide Mut. Ins. Co., 8 NY3d 283, 288-289 [2007], quoting State of New York v Seventh Regiment Fund, Inc;, 98 NY2d 249, 259 [2002]). The key elements of conversion are: "(l) plaintiffs possessory right or interest in the property and (2) defendant's dominion over the property, or interference with it, in derogation of plaintiffs rights" (Colavito v New York Organ Donor Network, Inc., 8 NY3d 43, 50 [2006] [citations omitted and emphasis added]). A conversion claim may be based on money, so long as the money is specifically identifiable and there is an obligation to return it or treat it in a particular manner (see Key Bank of New York v Grossi, 227 AD2d 841, 843 [3d Dept 1996]; Brennan's Bus Serv., Inc. v Brennan, 107 AD2d 858, 860 [3d Dept 1985]). Further, when funds are provided for a particular purpose, the use of those funds for an unauthorized purpose may constitute conversion (see Lemle v Lemle, 92 AD3d 494, 497 [1st Dept 2012]; Thys v Fortis Sec. LLC, 74 AD3d 546, 547 [1st Dept 2010]; Meese v Miller, 79 AD2d 237, 243 [4th Dept 1981]). As Supreme Court recognized, Petitioner has a clear possessory right to the overburden 43 payment reimbursements under Social Services Law § 368-a. Respondents have withheld and retained the funds that should have been used to reimburse Petitioner, and are presently interfering with Petitioner's possessory right to the overburden reimbursement payments by unlawfully denying all of Petitioner's claims for reimbursement (R 149-150). Moreover, as the Third Department has explicitly foUnd, Respondents have used the county tax funds collected from Petitioner for purposes other than reimbursing Petitioner-namely, to satisfy their own obligations under the Social Services Law (see County of St. Lawrence v Shah, 95 AD3d at 1553 ["(S)ince 1982, it has been the state's statutory obligation to pay the county share for Medicaid expenditures incurred in providing medical services to certain mentally disabled individuals. While the state, and not the county, has been obligated to pay for these medical services, it has continued to charge petitioner for these expenses and used these funds to satisfy its obligations under this statute.")). Accordingly, Respondents are liable for conversion of Petitioner's property by unlawfully detaining, interfering with, and improperly using the overburden local share funds that must be paid to Petitioner as reimbursement, in accordance with Social Services Law§ 368-a. B. Respondents are Unjustly Enriched at Petitioner's Expense. Under well-established New York law, "[a] person who has been unjustly enriched at the expense of another is required to make restitution to the other" (Blue Cross of Cent. N. Y. v Wheeler, 93 AD2d 995, 996 [4th Dept 1983] [internal quotation marks omitted)). To establish unjust enrichment, Petitioner need only show that (1) Respondents were enriched (2) at Petitioner's expense, and (3) that permitting Respondents to retain what Petitioner seeks to recover would be "against equity and good conscience" (Land Man Realty, Inc. v Weichert, Inc., 94 AD3d 1221, 1222-1223 [3d Dept 2012]; State of New York v International Asset Recovery Corp., 56 AD3d 849, 852 [3d Dept 2008)). 44 Here, each of the elements of unjust enrichment are easily satisfied. Respondents were enriched by unlawfully retaining the overburden reimbursement payments that they were statutorily required to pay to Petitioner. By depriving Petitioner of the reimbursement funds to which it was entitled, Respondents' enrichment was certainly at Petitioner's expense. Petitioner has yet to receive the outstanding reimbursements, and has suffered economically as a result. Moreover, permitting Respondents to retain the reimbursements plainly would be "against equity and good conscience," because it would permit the State to abrogate its undisputed debts to Petitioner unilaterally, years after the overburden local share payments were made in reliance on the 100% reimbursement obligation contained in Social Services Law § 368- a, without any legal justification whatsoever. Indeed, n-0twithstanding the clear language of Social Services Law § 3 68-a, Respondents have repeatedly refused to aclmowledge their liability for the overburden reimbursements, and engaged in several tactics to avoid the payments (R 150- 15 I). Even after numerous court decisions reaffirmed their statutory obligations, Respondents continue to assert meritless defenses while concealing the amount of their liability (id.). Throughout this time period, Respondents have enjoyed the benefit of retaining the county reimbursement funds solely at Petitioner's, the other counties', and the county taxpayers' expense (R 151). To allow Respondents-after years of unjustifiably withholding the payments and years of concealing their liability-to now wholly avoid the obligation, based on a retroactive statute intentionally designed to abrogate the State's longstanding and undisputed debt, would be fundamentally m1fair. Thus, Respondents are similarly liable to Petitioner for unjust enrichment. C. Supreme Court Erroneously Declined to Impose a Constructive Trust Over the Overburden Reimbursement Funds Owed to Petitioner. A constructive trust is an equitable device used to prevent unjust enrichment (see 45 Simonds v Simonds, 45 NY2d 233, 242 [1978]; Sharp v Kosmalski, 40 NY2d 119, 121 [1976]). Specifically, it is "the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee" for the rightful owner (Simonds, 45 NY2d at 241, quoting Beatty v Guggenheim Exploration Co., 225 NY 380, 386 [1919] [Cardozo, JJ). Indeed, "[t]he doctrine of constructive trust is.,. given broad scope to flex in response to all human implications of the transaction, to remedy whatever knavery ingenious wrongdoers can invent, to give expression to the conscience of equity, and to satisfy the demands of justice" (Nastasi v Nastasi, 26 AD3d 32, 38 [2d Dept 2005]). The Court of Appeals has set forth four factors to establish entitlement to a constructive trust (see Simonds, 45 NY2d at 241 ). These factors include: (I) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment (Cinquemani v Lazio, 37 AD3d 882, 882 [3d Dept 2007]; Henness v Hunt, 272 AD2d 756, 757 [3d Dept 2000]). Although these factors are useful in many cases, they are simply flexible guidelines, and are not rigidly applied (Simonds, 45 NY2d at 241; see Enzien v Enzien, 96 AD3d 1136, 1137 [3d Dept 2012]; Thomas v Thomas, 70 AD3d 588, 591 [1st Dept 2010) [stating that courts "have not applied a rigid standard when identifying relationships that can be the predicate for imposition of a constructive trust"); Moak v Raynor, 28 AD3d 900, 902 [3d Dept 2006)). Instead, "[a]s an equitable remedy, a constructive trust may be imposed whenever necessary to satisfy the demands of justice" (Cinquemani, 37 AD3d at 882 [emphasis added]), including against Respondents. Petitioner and Respondents are in a confidential or fiduciary relationship in jointly administering the Medical Assistance program that ensures that certain mentally disabled individuals receive the medical care that they need (R 15 I). As a result of this relationship, 46 Respondents have an array of fiduciary obligations to local social services districts, such as Petitioner, that include duties of full disclosure, fair dealing, and the provision of instruction and training on all aspects of Medical Assistance laws, regulations, practices, and procedures id. Under Social Services Law § 368-a, Respondents unequivocally promised to reimburse Petitioner for all Medical Assistance payments that it made on DOH's behalf (Social Services Law § 368-a[IJ[h][i] ["There shall be paid to each such district ... Beginning January first, nineteen hundred eighty-four, one hundred per centum of the amount expended for medical assistance for those individuals who are eligible pursuant to section three hundred sixty-six of this article as a result of a mental disability ... after first deducting therefrom any federal funds properly received or to be received on account thereof." (emphasis added)]; see also 18 NYCRR § 635.J[bJ). Petitioner reasonably relied on this unan1biguous statutory promise of reimbursement in making the overburden local share payments. Yet, Respondents have failed to ensure that proper overburden reimbursement payments were identified and paid to Petitioner, knowingly denied their liabilities, and failed to competently discharge their duties to Petitioner. By failing and refusing to reimburse Petitioner for the overburden local share payments made on behalf of DOH, in accordance with the unambiguous mandate of section 368-a, Respondents have unlawfully detained and have been unjustly enriched at Petitioner's expense by the total amount of overburden reimbursement owed to Petitioner. Accordingly, this Court should impose a constructive trust over the funds unlawfully retained by Respondents. CONCLUSION For the foregoing reasons, Petitioner respectfully requests that this Court modify the Order and Judgment of Supreme Court, Jefferson County by compelling Respondents to satisfy their statutory reimbursement duty under Social Services Law § 368-a and, as so modified, affirm the judgment in its entirety, and award Petitioner such other and further relief as this 47 Court deems just and proper. Dated: September 9, 2014 Albany, New York By: WHITEMAN OSTERMAN & HANNA LLP Chrim"Pf ~(okoy, faq. Robert S. Rosborough IV, Esq. Monica R. Skanes, Esq. Nicholas J. Faso, Esq. Jon E. Crain, Esq. One Commerce Plaza Albany, New York 12260 (518) 487-7600 NANCY ROSE STORMER, P.C. Nancy Rose Stormer, Esq. Michael Bagge, Esq. 1325 Belle Avenue Utica, New York 13501 (315) 797-0110 Attorneys.for Respondent/Appellant 48 APPENDIX .J Matter of County of Broome v Shah Index No. 2014-0090 PRESENT: HONORABLE JEFFREY A. TAIT JUSTICE PRESIDING STATE OF NEW YORK . SUPREME COURT: COUNTY OF BROOME In the Matter of COUNTY OF BROOME, Petltioner-Plainti ff, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules -against- NIRA V R. SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-Defendants. APPEARANCES: Christopher E. Buckey, Esq. White, Osterman & Hanna, LLP Attorneys for Pe1itioner-Plaintijf One Commerce Plaza Albany, NY 12260 Nancy Rose Stormer, Esq. Nancy Rose Stormer, P.C. Attorneys for Petitioner-Plaintiff 1325 Belle Avenue Utica, NY 1350 I At a Term of the Supreme Couit of the State ofNew York, held in and for the Sixth Judicial District, at the Broome County Courthouse, in the City of Binghamton, New York on the 11th day of March 2014. DECISION AND ORDER Index No. 2014-0090 RJl No. 2014-0071-M C. Banis Dague, Esq. Assistant Attorney General Attorneys for Respondent-Defendant J'he Capital Albany, NY 12224-0341 HON, JEFFREY A. TAIT, .LS.C. .Tb.is matter is before the Court on the hybrid CPLR Article 78 proceeding and plenary action commenced by Petitioner-Plaintiff County of Broome (County) seeking to compel reimbursement for certain Medical Assistance costs from Respondents-Defendants Nirav R. Shah, M.D., M.P.H., as Commissioner ofJe New York State Department of Health, and the New York State Department of Health (together refen·ed to as State). In opposition, the State submits an Answer to the Article 78 claims and moves for summary-judgment dismissing the County's declaratory judgment and state law plenru.y claims. Arguments of the Parties The County asserts that between January 1, 1984 and December 31, 2005 it incurred expenses on the State's behalf for the treatment ofcertain mentally disabled Medical Assistance recipients, .known as "overbwden expenses."' The County claims that the Slate has refused to reimburse it for those expenses, which total at least $1,170,022.83 and the State is obligated to pay pursuant to Social Services Law § 368-a.' The County asserts that it transferred County funds to the State to satisfy the cost of treating these individuals on a weekly basis, and the State was then responsible for identifying th()se who satisfied the overburden criteria and reimbursing the County for the costs of their treatment pursuant to Social Services Law § 368-a. 2 A detailed recitation of the history of and interplay between Social Services Law§ 368-a and the 2005 Medicaid cap legislation and the 20 l 0 amendment thereto, as well as the related litigation regarding the impact on the payment/reimbursement of overburden expenses, is contained in the papers submitted by bo!h the County and the State and thus will not be repeated here. On this application, the County seeks~n Order: amml!ing the State's December20, 2013 determination· denying its claims for reiJbursement for pre-2006 overburden expenses; compelling the State to approve and pay its claims in that regard; compellh1g the State to calculate and pay the total remaining overburden reimbursements due; declaring Section 61 of Part D of Chapter 56 of the Laws of2012 (Section 61) unconstitutional; awarding the County damages of no less than $1, 170,022.83; imposing a constructive trust over such funds owed by the State; and awarding the County costs, disbursements, and counsel fees. The State'sprimary argmnentinopposition to the County's claims isthatSection61 bars reimbursement of the overburden expenses sought by the County. Section 61 provides: Notwithstanding the provisiops of section 368-a of the social services Jaw or any othercontraryproYrisionoflaw, no reimbursement shall be made for social services dist~cts' claims submitted on and after the effective date of this paragrap~, for district [overburden] expenditures incurred prior to January I, 2bo6 , .. The State submits the affidavit of Robert LoCicero, the Deputy Director for Administration with the New York State Department of Health, who states that the purpose of Section 61 was to address prior litigation3 and "to 'wall-off' any further potential State liability for such overburden reimbursement claims that were submitted on or after the provision's Prompted by the State's prior refusals to reimburse counties for pre-2006 overburden expenses, with the State first relying on the 2005 Medicaid cap legislation (effective January 1, 2006) and then on the 20 I 0 amendment thereto as a basis to deny the claims. The State claimed both barred reimbursement for pre-2006 overburden expenses. This led to several rounds of litigation by multiple counties, with courts unifonnly rejecting the State's interpretation of the Medicaid cap and later amendment and compelling reimbursement of pre-2006 overburden expenses pursuant to Social Services Law§ 368-a (see Matter of County o/St. Lawrence v. Shah, 95 AD3d l 548 [3d Dept2012)[2010 amendment to the Medicaid cap statute did not relieve State of its obligation to reimburse counties for overburden expenditures made prior to that statute's effective date]; Matter of County of Niagara v. Daine.r, 91AD3d1288 (4th Dept 2012]). 2 effective date of April l, 20l2" (see LoCicei·o affidavit at '\l 50). The State fhunes Section 61 as a "clarifying amendment" meant to make it clear that the State is not pennitted to make reimbursement payments to county social service districts for pre-2006 overburden expense claims. In reply, the County argues that Section 61 is not.merely a "clarifying amendment" and ' instead amounts to a substantive deprivation of its vested right to reimbursement of the ! overburden expenses which is being retroactively applied. The County points out that several courts have recently found Section 61 unconstitutional (see Matter of County of St. Lawrence v. Shah, Sup Ct, St. Lawrence County, August 30, 2013, Demarest, J., Index No. 0141656; Matter of Chautauqua County v, Shah, Sup Ct, Chautauqua CDunty, December 9, 2013, Chimes, J., Index No. 2013-1266; Matter of County of Jefferson v. Shah, Sup Ct, Jefferson Coun1y, January 15, 2014, Gilbert, J., Index No. 2013·1956; Matier of County of Oneida v. Shah, Sup Ct, Oneida County, February 28, 2014, Cl£rk, J., Index No. 2013-1788; see also Matter of Chemung County vs. Shah, Sup Ct, Chemung County, November 19, 2013, O'Shea, J., Index No.: 2013-1849 [annulling State's denial of County's overburden reimbursement claims and I granting Petition to allow such claims]; Matter of County of Niagara v. Shah, Sup Ct, Niagara County, June 18, 2013, Panepinto, J.,IndexNo. 149492-2013). The County also points out that Section 61 only prohibits payment of "claims submitted" and does not impact the State's statutory obligation to calculate the total reimbursement liability under Social Services Law § 368-a and pay the County the amount owed. Analysis As noted above, multiple recent Supreme Court decisions involving the identical issues presented here have held that the State cannot rely on Section 61 to deny counties' claims for reimbursement of overburden expenses and/or have found Section 61 unconstitutional. Those courts have r¢asoned that because tbe County's right to reimbursement and repayment of the overburden expenses bas already accrued, Section 61 cannot retroactively relieve the State of its obligation to pay those funds. The State asserts that many of thos~ decisions are based at least in part on the Third Department's holding in Matter of County ais1. Lawrence v. Shah (see Id., 95 AD3d at 1548). I The State argues that holding was based largely on the Third Department's view that the State was attempting to repea-1 Social Services Law § 368-a by implication.4 The State asserts that both the text and legislative history' ofSection 61 rectify any perceived deficiency in that regard, However, the Third Department went on to conclude that the 20 l 0 amendment to the Medicaid cap statute could not relieve the State of its obligation to reimburse counties for overburden expenses even if it was intended\ to repeal Social Services Law§ 368-a, reasoning: 4 i Since the state was never: entitled to these funds, the 2010 amendment, even if found to apply to overburden expenditures, cannot serve to transform these county funds into state property and relieve the state of the legal opligation to return tbem (see id. at 1554 [citing its prior holding that ~he county's right to reimbursement of pre-2006 overburden expensds accrued upon paymentto the State for services provided to overburdened patients for which no local share was owing}). Since neither tho 2010 11mendment tO the Medicaid cap nor its legislative history refers to the State's obligation to reimburse counties for pre-2006 overburden expenditures and the amendment does not explicitly repeal Social Services Law§ 368-a(l)(h). $ ' fn that regard, its legislative history mites that Section 61 "is necessary to address adverse court decisions that have resulted in State costs paid to local districts for pre-[Medicaid]cap periods, which conflict with the original intent of the local cap statute." 4 In light of the foregoing, based on these cases, and particularly the reasoning set forth in Matier ~f County of SI. Lawrence v. Shah, supra, the State cannot rely on Section 61 to deny the County's claims for reimbursement ofpre-2006 overburden expenses. Conclusion The State's December 20, 2013 determination denying the County's claims for i reimbursement of overburden expenses is annulled as arbitrary, capricious, and/or affected by error oflaw, The County's request for an Order compelling the State to approve and pay such claims is granted as follows: the State ls direeted to pay the County's claims for reimbursement of overburden expenses totaling $1, 170,022.83,6 or provide proof that any or all of those claims are either inaccurate or not legitimate, and to calculate and pay any remaining overburden expense reimbursements due under Social Services Law§ 368-a within 30 days of service of this Decision and Order with notice of entry, The County's requests for costs, disbursements, and counsel fees and imposition of a constructive trust are denied. The State's motion fur summary judgment is denied. This Decision shall also constitute th.i Order of the Court pursuant to rule 202.8(g) of the Uniform Rules for the New York State Trial Courts and it is deemed entered as of the date 6 The State acknowledges that the County submitted claims on or about September 27, October 3, and November 18, 2013 totaling $1,170,022.00 for reimbursement of pre-2006 overburden expenses and that it disallowed! those claims based on Section 61 (see LoCicero affidavit at §§ 53-54). There is no indioati4n that th\l State had any objection to the amount sought; rather, the State's opposition to rdimbursement seems to be based e11tir1>ly on the application of Section 61. 5 below. To commence the statutory time period forappeals as of right (CPLR 55 !3[a)), a copy of this Decision and Order, together with notice of entry, must be served upon all parties. i Dated: June 12, 2014 Binghamton, New York 6 Most or all of the documents upon which this Decision and Order is based were received by Chambers in a scanned electronic fonnat from the Broome County Clerk's Office and the originals remain filed with the Broome County Clerk. Therefore, except as noted below, no documents have been forwarded to the Broome County Clerk with this Decision and Order. Documents forwarded to the Broome County Clerk with this Decision and Order: None Matter of County of Cayuga v Shah Index No. 2014-00000261 :1 ; i " SUPREME COURT OF THE STATE OF NEW YORK' COUNTY OF CAYliGA fn the Matter of COUNTY OF CA YUGA, Petitioner-Plaintiff, For a JtJdgmentJJul·suant to A1tlcle 78 of the Civil Practlc.e Law. mil Rllles and a Dedl\rntory Judgm;ent Pursuant to Section 3001 oft\le Civil Practice Law and Rules -against- NIRA V R. SHAfl, M.D •. , M.P,H;, as Commissioner of the New York State Deparlment of Health and THE NEW YORIi:tnburse Petitiohor for fhe claims asserted in this pro<;eeding because Seetion 61 exting;!lshed Petitioner's right to reio:ibursemerit:for pre-2006 Overburden costs nuder Social Services Law § 368-a; WHEREAS, Petitioner served the Reply Affidavit ofNMoy Rose Stormer sWQrn to May 6, 2014 and the Affidavit of Clu·istopher E. Buckey sworn t0 May&, 2014 o.n May 6 2014 .and opposed Respondents' motion fo.r summary jirdgment. on its·dl'claratory juqgment and state law p1ena:ry l)laims. Petitioner contended that' Section 61 did not extii1gnish Petitioner's right to reimbiu·sement for pre-2006 Overb.u.1'det\. paymei1ts Lindel' S9cial Services Law § '368-a becmisc: (1) insof;w as Section 61 attempts to· deny Petitioner repayment of obligations already accrued, it is 1moonstituticmal; (?-) the plaih language of Section 61 bats reinibursel\ielit for claims that PetitiO.ney was not of?llgated to submit, and does not impact Respondents' unilateral and nondisoretiouary sMutol'Y duty to calculate the total relmbursement liability under· Social Services Law § 36.S"a and pay Petitioner for the· amoiints owed; (3,) Respondents' decades-long course ofintentionally or negligently dilatory· conduct permits thls Court to apply Sll<\lal Services Respondents' behalf, wit110ut consideration of Section 61, under tlie special facts exception; (4) Section 6'J is not a clarifying amendment, but.is a s11bstantive deprl.vatk>n of P.etijjQner"s vested dghts to reimbursenient for Ove11burde11 expenses incu11·ed prior to .Tamiary 1, 2006 that is being retroactively applied; (5) even if the stetitiqner's payn1@nt to DOB fol' setvioes provided to averburdened patients for whieh no. local share-was owing; and it is farther ORDERED, ADJUDGED AND DECREED· thaj:, for the reasons set forth h1 the Ti•l)i:lsoript, thi$. Coult :!hid$ that petitioneJ:'s right to reimbursement \mder Social Services Law § 3-68.a; is a vestodbligations ali'ea.dy accrned, it is uncbnstituifonal; and it ls further ORDERED, ADJUDGED AND DECREED that the Verified Petitiortand Complatnt. is granted "in part and denied in part; and it is further ORDERED, 1\l)JUDGED AND DECREED tha~· the determination of Respendents, dated February J(j, 2014, purporting to deny Petiti011et's claims for teimb1m;ement of the overhnrden expG;nses that PetitioJ1er incun·ed on behalf of Respondents prior to.Ja1111al'y l; 2006, pursuant-to Social Services Law § 368-a, solely i;>n tli.e basis of Section 61, is hereby annulled as arbitrary and caprfciou~ an(l/or affected. by nn e1Tor oflaw; and it is ·further ORDERED', ADJUDGED A.ND DECREED that,. for fue rea:sons 3et forlh in the Ti:an3oript, Re&poJ\C\ents are directed to fo11hwith allow Petitioner'·s claims for reimbursement and to pay $426;630.15 to Petitioner within 30 days of setvice. with Notii;e of Entry of this Order and J11dgme1it;, ru1d it is further ORD.ERED; ADJUDGED AND DE.CREED that the remaining relief requested in the Verified Petition Md Complaint is dented as academic. Dated: Aubum, New York May tt-, Z014 SO ORDERED, fi.:r~: .iustiee 6fthe Suptenie Court. EXHIBIT A 1 S'.U.PREME COURT OF ~'HE STATE OF NEW YORK 2 COUNTY OF CAYUGA MOTION TE:RM ____________________________ .__. _____ _, __________ )( 3 COUNTY UF CA YliGA, ! Index Mo., Pet.i,ti·oner. 1 :2014-0261. 4 -against- NIRAV R •. SHAH., MD, MPH, l\$ COMMI.SSION!!:R OF 5 TH!!: NEW YORK STATE DEPARTMENT OE' HEALT.H AND 6 7 9 10 11 J. 2 13 15 16 17 1a 19 2 (I 21 22 23 24 25 THE NBW YORK STM'B DBPARTMENT oF HE:ALTH, Respondents. : Pecisio;n ---------~----------------~---~-~--~---------x Cayuga G!ounty Ctmrtho\lse Auburn, Ne~ York May U, 2014. HON, THOMAS G. LEONE, justice A p p e a r a n c e a : Wf!IT.ElMAN, QSTERMAN & HANNA, LLP Att.orne;y.s for the P.eti·tioner one Comrrl$rce Plaza Albany, New York 1·2:2 6Q BY: CHRIS.TO.PliER E.. BUCKEY, ESQ., of i:o-ounse.l NEW YORK. STA.T·E OFFICE ,OF THB A,TTORNE;)~ GENERAL Attorneys for Respondents 61 .. 5 Erie Eb.ulevard West;, ,Suite 102 Syracuse, New York 13404·-241'5 BY: BONNIE G. LEVY 1 ESQ, Assistant. Attorney General, of counsel Lisa M·. Gia.con.a RJ?R, RMR, CSR 1 ·.: 1 2 3 4 5 6 7 8 9 10 11 13 13 14 15 16 17 18 19 20 21 22 23 24 25 2 THE C:OORT l /\ll right. A11 right,. Firs.t of all, I want to t!).ank bqt_h at-torneys for their sub1nis$ipl).s· -and their o:bal arguments and their professionalism and coui:t·esy that they've shown to one anothe·r. The Court is going to make the followin_.g Hndings, and hopefully it \<1011't pe j::o6 (iisjo:i:nted. -Fo" t)le reµs.on·s t_hat Were se·t forth in the County's paper" and the .consistent Couiot determinations which this Court adopts, the respondents' motion for s1Jmmpry judgment, the defenses" ~~cuse me, and/or qbjection.S of law are rejected. The Court is· .going to declare that Section 61 of Part D· ·of .Chapter, .5'6 of' the· laww of' 2012 )ihc()nstitutional as it is cl.early intended to repeal Social Services J,aw· S.ection 388-A{l) (tl) to relieve the State o.J! its ·statutory obligation to pay reirnl:mrsement of an al.ready accrued right to re~ayrnent. The Caurt is furtJ,er going to· annul the February lOtl:), 2013 determination ·of the Depa.rtme-nt of Health denying the· County's reimbursement claim as arbitrary, capr·icious and/or affected by error of th1> law. The Court's going to further grant the County's. request :J'<;>r an order in the nature of a mandamus directing that -- the Depa-rtment o.f Healtl). to review, l 2 3 4 5 6 7 8. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 verify ·and ·pay any J.eg.itimate claimed overbm:den expenses and ft1rther direct that the Department of Heal th to pay. the pend.i.ng claim of $426, $3·0 .15 or provide .P.roqf that any or a1l. of the claim i·s hot legitim<;t·e within 3Q days of ser;vice of the notice ef "ntry o·f an orde.r. I '·m go.ing to deny any and all other re.lief .as moot, and I'm going to ask Mr. Bqckey if he would be kind to prepare the proposed order -- kind enough to prepare the proposed ordeL MR.. BUCKEY: I will, Your Ho.nor. ;i:n o.ue peti tfon we a9k th'lt the Court a~l'i6 di.i:ect tl)e. State td ca:loula.te. any amounts tha:t a,re· due· and bwhig to the County going fo<:ward, ls the Court is that part of the relief that the Court is denyin·g as moot or should I includ<> that affirmative relie.:f. in the prop):>sed order and judgment? THE COURT:. I am going to deem that as being moot. MR. Bt)CKEIY: Okµy. We will sublili t it· on notice, Yoµr Honor.- '.t'H;c COURT: All dght. I appre·ciat·e it. thank you ve.ry much. MS . LEVY: Thank you. MR. BUCKEY: Your Honor,. thank you very much .. THE COURT.: Good to see .b.oth of yoii. 4 1 Sor:r,Y. tc held y.ou up so 10n.g. 2 MR, lilDCKll:I'.: No problem. 3 THO: COURT: 'Than.k YOU·; .(Certified to be a tru<:; and acour·ate transcript.) 5 6 ~ )d, ./1£,i?.IM\~' o"fficial Court Reporter 7 8 J. 0 11 12 i4 15 1• 17 18 19 20 ~1 22 23 24 25 Matter of County of Chautauqua v Shah Index No. 2013-1266 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF CHAUTAUQUA In the Matter of COUNTY OF CHAUTAUQUA, Petitioner-Plaintiff, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory Judgment Pursuant t-0 Section 3 00 I of the Civil Practice Law and Rules -against- NIRA V R. SHAH, M.D., M.P.H:., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-D~fendants. ORDER AND JUDGMENT Qo!'3 - il-hh Index No.: eV-2':013-178·8 Hon. Deborah A. Chimes WHEREAS', Petitioner County of Chautauqua ("Petitioner") commenced the above- captioned hybrid CPLR Article 78 proceeding and plenary action by Verified Petition and Complaint, dated September 6, 2013, seeking, among other things, to compel Respondents Nirav R. Shah, M.D:, M.P.H., as Commissioner of the New York State Department of Health and the New York State Department of Health ("DOH") (collectively "Respondents") .to reimburse Petitioner for a total of $217,967.75 in certain Medical Assistance costs commonly known as Human Services Overburden ("Overburden") pursuant to State law, to compel Respondents to calculate and pay the total Overburden liability owed to Petitioner, and to declare Section 61 of Part D of Chapter' 56 of the Laws of2012 ("Section 61 ")unconstitutional; WHEREAS, Respondents served their Verified Answer and supporting Affidavit of Robert LoCicero sworn to September 26; 2013 in response to the Verified Petition and Comp.lain! on September 30, 2013, and moved for summary judgment on Petitioner's declaratory judgment and state law plenary claims, arguing that Respondents were no longer obligated to reimburse Petitioner for the claims asserted in this proceeding because Section 61 extinguished Petitioner's right to reimbursement for pre-2006 Overburden costs under Social Services Law § 368-a; WHEREAS, Petitioner served the Reply Affirmation of Nancy Rose Stormer dated November 8, 2013 and the Affidavit of Christopher E. Buckey sworn to' November 8, 2013 on November 8, 20 l 3 and opposed Respondents' motion for summary judgment on its declaratory judgment and state law plenary claims. Petitioner contended that Section 61 did not extinguish Petitioner's right to reimbursement" for pre-2006 Overburden costs under Social Services Law § 368-a because: (I) insofar as Section 61 attempts to deny Petitioner repayment of obligations already accrued, it is unconstitutional; (2) the plain language of Section 61 bars reimbursement for claims that Petitioner' was not obligated to submit, and does not impact Respondents' unilateral and nondiscretionary statutory duty to calculate the total reimbursement liability under Social Services Law § 368-a and pay Petitioner for the amounts owed; (3) Respondents' decades-long course of intentionally or negligently dilatory conduct permits this Court to apply Social Services Law § 368-a as it existed at the time that Petitioner incun;ed the Overburden expenses on Respondents' behalf, without consideration of Section 61, under the special facts exception; ( 4) Section 6 l is not a clarifying amendment, but is a substantive deprivation of Petitioner's vested rights to reimbqrsement for Overburden expenses incUITed prior to January I, 2006 that is being retroactively applied; (5) even if the statutory arid regulatory bases for Overburden reimbursement had been repealed, Petitioner's vested rights to reimbursement must survive pursuant to General Construction Law § 93; (6) Section 61 deprives Petitioner of due 2 process of law; (7) Respondents' defense based on the doctrine of !aches is ban-ed by collateral estoppel; and (8) Section 61 does not bar Petitioner from recovering for conversion, unjust enrichment, and constructive trust; WHEREAS, the Com1 having heard oral argument of counsel for the parties on December 9, 2013; and NOW, upon due consideration of all the pleadings and proceedings in this matter and the oral arguments of counsel, it is h.ereby ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in the transcript of the December 9, 20 I 3 proceedings before this CoU!'t ("Transcript") (attached hereto as Exhibit A), this Court finds that Petitioner's right to reimbursement under Social Services Law § 368-a accrued prior to 2006, upon Petitioner's payment to DOH for services provided to overburdened patients for which no local share was owing; and it is further ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in the Transcript, this Court finds that Petitioner's right to reimbursement under Social Services Law § 368-a is a vested right that cannot be extinguished by retroactive legislation; and it is further ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in the Transcript, insofar as Section 61 attempts to deny the County repayment of obligations already accrued, it is unconstitutional; and it is further ORDERED, ADJUDGED AND DECREED that the Verified Petition and Complaint is granted in part and denied in part; and it is further ORDERED, ADJUDGED AND DECREED that the determination of Respondents, dated September 4, 2013, purporting to deny Petitioner's claims for reimbursement of the overburden expenses that Petitioner incun-ed on behalf of Respondents prior to January I, 2006, 3 pursuant to Social Services Law § 368-a, solely on the basis of Section 61, is hereby annulled; and it is further ORDERED, ADJUDGED AND DECREED that, for the reasons set fmth in the Transcript, Respondents are directed to fmthwith allow Petitioner's claims for reimbursement and to pay $217,967.75 to Petitioner within 30 days of service with Notice of Entry of this Order and Judgment; and it is further ORDERED, ADJUDGED AND DECREED that the remaining relief requested in the Verified Petition and Complaint is denied. Dated: Mayville, New York December !/!J_, 2013 4 SO ORDERED, ~,.4 d'lj._ n. Dci;orah A. Chimes Justice of the Supreme Court 1 2 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF CHAUTAUQUA 3 COUNTY OF CHAUTAUQUA, 4 5 6 7 8 9 Plaintiff Vs. NIRAV R. SHAH, MD MPH, as Commission~r of the New York State Department of Health, and the NEW YORK STATE DEPARTMENT OF HEALTH, Defendants Article 78 Court's Decision Kl-2013-1266 December 9, 2013 1 10 Chautauqua County Courthouse Mayville, New York 11 12 13 B E F 0 R E: 14 HONORABLE DEBORAH A. CHIMES 15 16 17 18 AP PE AR AN C E S: 19 20 21 22 23 24 25 CHRISTOPHER E. BUCKEY, ESQUIRE Appearing for the Plaintiff DARREN LONGO, ESQUIRE Appearing for the Defendant GERARD F. LINNECKE Senior Court Reporter 1 2 3 4 5 6 Court's Decision 2 MONDAY, DECEMBER 9, 2013 CLERK OF COURT: County versus Shah. Counselors, please note your appearances for the Record. MR. BUCKEY: Christopher Bucky from Whiteman, Osterman & Hanna for the County of Chautauqua. MR. LONGO: Darren Longo, Assistant Attorney 7 General, for the respondents/defendants. 8 THE COURT: Alright. You may proceed. 9 (WHEREUPON PROCEEDINGS WERE HAD NOT TRANSCRIBED HERE) 10 11 12 13 14 15 16 17 18 19 20 21 THE COURT: Okay. Court's ready to make its decision. The petitioner's motion is granted in part and ·denied in part. Section 61 attempts to extinguish the petitioner's vested right to reimbursement of overburden payments under Social Services Law 368(a) retroactively, and therefore is unconstitutional. Petitioner's request for an order compelling respondents' compliance with Social Service Law 368(a) is granted. Petitioner's granted judgment in the amount of $217,967.75 together with statutory interest. Remainder of petitioner's motion is denied. Respondent's cross motion to dismiss is denied. Petitioner is to prepare and submit an order 22 in 30 days, and attach a copy of the transcript to the 23 order. Thank you. 24 (PROCEEDINGS CONCLUDED) 25 1 2 3 CERTIFICATION 4 5 I, Gerard F. Linnecke, Senior Court Reporter, do 6 hereby certify that the foregoing is the transcript of 7 Article 78 held December 9, 2013 in the matter of County of 8 Chautauqua Vs. Shah, et al. 9 I further certify that the questions and answers were 10 taken down in stenotype by the said Reporter, Gerard F. 11 Linnecke, and afterwards reduced to typewriting by the said 12 Reporter. 13 I further certify that the proceedings and evidence 14 are contained fully and accurately in the notes taken by me 15 · on the within proceedings, and that this copy is a correct 16 transcript of th,e same. 17 In testimony whereof, I have hereunto subscribed my 18 hand this 13th day of December, 2013. 19 20 21 22 Senior Court Reporter 23 24 25 Matter of County of Chemung v Shah Index No. 2013-1849 23-NDV-2013 00:29 From:CUM CO CLERK 6072422448 To: 15184877777 Pa9'e: 1-'3 •. PRESENT: HON. JUDITH F. O'SHEA SUPREME COURT JUSTICE STATEOFNEW YORK _SUPREME COURT: COUNTY OF CHEMUNG In the Matter of the Application of the Chemung Colll).ty, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory Judgment pursuant to Section 3001 of the Civil Practice Law and Rules vs. Nirav R. Shah, M.D., M:f.H., as Commissioner At a Motion Term ofThe Supreme Court of the State of New Yorlc held in and for the Sixth Judicial District, at the Hazlett Building, in the County of Chemung, -Elmira, New York, heard on the 1 O" day of -Octohe< 2013. DECISION & ORDER INDEX# 2013-1849 RJJ # 2013-0535-M of th.e New York State Departmen.t of Health 311d The New York State Department of Health, Re$pondeots. JUDITH F. O'SHEA, ;m!;; FIW>INGS OF FACT In a Notice of Petition dated August 23, 2013, petitioner $eeks to annual respondents' detonnlnation denying their claims for reimbursement of the overburden expenses incurred prior to January t, 2006underSocial Seryices Law§ 368-aas arbitrruyand capricious and/or affected by an error of law. Petitioner also seeks tbe following relief; compelling respondents to calculate the total reimbursement due; dix;Jaring Section 61 of Pa:rt D of Chapter 56 of the Laws of2012 unconstitutional; damages in the amount of $606,203.31; imposing a constructive trust over the funds respondents were obligated to reimburse, and; costs, disbursements and attomey fees. 23-NDV-2013 00:29 From:CUM CO CLERK 6072422448 To:15184877777 ... .. ln an August 31, 2011 Decision and Otderissued by this Court, petitioner's application to compel respondents to reimburse for overburden costs/expenses pursuant to Spcial Sery:!ces Law § 368-a was granted. The Court fullowed the reasoning outlined in Matter of County bf St. Lawrence v, Daines, Index# CV.2010-0134779 (SUp. Ct, St. Lawrence County, June 29, 2011) and Matter of County of Herkimer v. Daines. Index# 97370 (Sup. Ct. Herkimer County March 11, 2011) in compelling reimbursement. Both the Third Department and Fourth Department have expressly affirmed such determinations which compelled reimbursement, See, Matter of County ofl;>t. J'.,awrencev. Daines. 81A.D.3d212 (3"' Dept. 2011}; MatterofCoJlllt.Y of Niagara v. Daines, 83 A.D.3d 1506 (4"' Dept. 2011); Matter of County ofNiagara v. Daines. 79 A.D.3d 1702 (3'' Dept. 201 O); Matter of County of Herkimer v. Daines, 60 A.D . .3d 1456 (4'' Dept. 20Ct9); Matter of County ofNiagru;a v. Daines, 60 A.D.3d 1460 (4'' Dept. 2009). See, also Matter of County of St. L1wrepce v. Shah, 95 A.D.3d 1548 (3'' O~t. 2012), wherein the Court stated that respondents could not retroactively avoid their statutory reimbursement obligation to counties under Social Services Law § 368-a. Section 6 J of Part D of Cb apter 56 of th" Laws of2012 was passed by the Legislature as part of the 2012 Executive Budget, which provided that "notwithstanding the provJsions of section 368-a of the social services law or·anyother contrary provision of law, no reimbursement shall be made for sooial service• districts' claims submitted on and after 1he effeQtiVe date of this paragraph, for district expenditures incurred prior to January l, 2006." Respondents have relied on Section 61 to deny overburden reimbursement, which has spurred recent litigation, identical to the 11ction at bar, that has resulted in Courts expressly stating that Section 61 does not bar reimbursement. See, Matter of County of Niagara v. Shah, eta!., (Sup. Ct., Niagara Co., Nugent Panepinto, J .. Index No. !49492-2013, June 18, 2013); Matter of County of St. Lawrence v, filli!h, (Sup. Ct., St. Lawrence Co., Demarest, J., Index No. 140712, July 31, 2013); Matter of County of St. Lawrence v. fil!&!l, (Sup. Ct., St. Lawrence Co., Demarest, J., Index No. 140998, July 31 1 2013); Matter of County of St. Lawrence v, Shah, (Sup. Ct., St. Lawrence Co., Demarest, J., lndei<, No. 0141656, August 2013). Respondents have submitted a verified answer to the petition, along wiih a motfon for summary judgment on the declaratory judgment claims, In sum and substance, respo11denls maintain that Se(ltion 61 is a clarifying amendment for the application of the Medicaid Cap Statute whlch permissibly cuts off petitiot;1er' s overburden claims retroactively. Petitioner has submitted reply papers. CON<;LUSJONS OF LAW lt is clear that the same set of facts and legal analysis are present in this action as in the recent a1>tions iu Matter of County ofNiagatJI v. Shah. et al., (Sup. Ct., Niagara Co., Nugent Pan~into, J,, Index No. 149492~2013, Jim.t118, 2013); Maj:ter of County of St. Lawi;i;nce v. SM!!, (Sup. Ct., St. Lawrence Co., Demarest,!., Index No. 140712, July 31, 2013); Matter of. County of St. Lawrene@V.IDl;W, (Sup, Ct., St. Lawrence Co., Demarest, J., Jn_dex No. 140998, July 31, 2013); Matter of County of St, Lawrence v. fill!!h, (Sup. Ct., St. Lawrence Co,, Dem!lfest, J., Index No. 0141656, August 2013), and the Court sees no reason to depart . therefrom. Based upon these holdiugs, and the eotire·rerord before The Court, including but not 23-NOV-2013 00: 29 From: CUM CO CLERK 1 < 6072422448 To: 15184877777 limited to thi; reasons as set forth in petitioner's papers, as well as the holding Jn Matter of County of St. Lawrence v. Shllh, supra, respondents cannot rely on Section 61 tq deny petitioner',$ claim for ovezburdet) costs. It is therefore, ORDERED, that respondents' August 12, 2013 denial of petitioner's reimbursement claims is hereby annulled as arbitrary, capricious and/or affected by an error oflaw; and it is further ORDERED, that the petition is hereby granted, to the extent that respondents are hereby directed, to allow petitioner's claims for reimbursement of$606,203.31, within thirty (30) days of entry of this Decision and Order; and it is further ORDERED, that respondents shall calculate and pay anyrnmaining overburden reimbursement due tinder Social Seryices Law § 368-a within thirty (30) days of entry of this Decision and Order; and it i$ further ORDERED, that tespondents' motion for summary judgment is den.i,ed; and it is further ORDERED, that petitioner's request for costs, disbursements and attorney fees is denied; and it is furfher ORDERED, that the remaining relief requested in the petition is denied as academic. This shall constitute the Decision and Order of The Court. ENTER Dated: November/f.2013. , Original: Nancy Kreisler. Acting Chief Clerk Supreme & County Courts / Matter of County of Genesee v Shah Index No. 63493 STATE OF NEW YORK SUPREME COURT : COUNTY OF GENESEE In the Matter of COUNTY OF GENESEE, Petitioner-Plaintiff, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules, v. NIRAV R. SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-Defendants. CHRISTOPHER E. BUCKEY, ESQ. Attorney for PetitionercPlaintiff DARREN LONGO, ESQ. Index No.: 63493 Assistant Attorney General for Respondents-Defendants DECISION AND JUDGMENT ROBERT C. NOONAN, J. The County of Genesee ("petitioner") has brought the captioned hybrid proceeding to compel respondents to reimburse the county for certain medical assistance expenditures made prior to the year 2006, and for related relief. Respondents-defendants ("respondents") oppose, and request summary judgment on petitioner's plenary claims. The matter came before the April 25, 2014 Special Term of this Court. Procedurally, given the special proceeding brought by petitioner pursuant to CPLR Article 78, th.e Court must apply a summary judgment analysis to the pleadings, papers and admissions initially submitted to the Court (CPLR §409[b]; Matter of Trustco Bank v. Strong, 261 AD2d 25, 27; Matter of Empire Mutual Insurance [Greaney], 156 AD2d 154, 156). Since, under those rules, the Court would search the record in any event (Gilheany v. Civil Service Employees Association, 59 AD2d 834 ), a formal notice for cross-motion for summary judgment will not be required either in the special proceeding or the plenary action. However, "(o)nly if no triable issues of fact .are raised may a court make a summary determination following the hearing" (Slisz v. Beyer, 92 AD3d 1238, 1241). Very basically, the state, county and federal governments have historically shared the expense of providing medical care to individuals who were indigent, including those disabled as a result of mental illness. The government funded health program is administered by the State Department of Health with funds received from the federal, state and local governments. Counties make payments to the state for their local share of the medical assistance payments. Although the State pays the medical providers. the county has the initial responsibility for the cost of medical providers for such indigent individuals within their local communities. With the movement toward de-institutionalizing many such Individuals from state institutions and into the community, thus shifting such costs from the state to 2 the counties, the state was prevailed upon to assume full responsibility for the medical expenses of those de-institutionalized individuals (L. 1974, cc. 620 & 621), and then to reimburse the counties for the full amount of medical assistance payments (overburden expenditures) made by the county to the state on behalf of those de-institutionalized individuals (Social Services Law §368-a[i][h]). "Social Services districts thus initially paid their full local shares of the State's Medicaid payments to providers. The State subsequently identified those Medicaid recipients who are mentally disabled under the applicable overburden criteria and, for those that qualify, issued quarterly reimbursement payments to districts" (4/11/14 LoCicero affidavit at '![18 [italics added]). The state retained the ultimate responsibility to identify, code and track those de-institutionalized individuals for which the county was entitled to medical assistance reimbursement. As alleged by petitioner, it has since been discovered . that for a number of years the state either miscoded or surreptitiously recoded individuals for whom the counties were otherwise entitled to reimbursement for medical assistance, thus depriving the counties of their full reimbursement (see also 4/23/14 Stormer affidavit at 'ff'IJ25 - 60). 1 Voluntary disclosure of the pertinent information has not been forthcoming (id at '!f'lJ61 - 69). Effective January 1, 2006, the methodology for computing the local share of the medical assistance cost changed with a "Medicaid cap statute" (L. 2005 c. 58, Part C), eliminating the payment-then-reimbursement method utilized under Social Services Law §368-a(1 )(h). However, the Appellate Division of the New York State Supreme Court declared that the new formula was not retroactive and did not impair 3 the counties' right to reimbursement for overburden expenditures accrued prior to January 1, 2006 (see Mattr:;r of County of St. Lawrence v. Daines, 81 AD3d 212; Matter of County of Herkimer v. Daines, 60 AD3d 1456). It was subsequently determined that additional legislation (L. 2010, c. 109, Part B, §24), which the state construed to prohibit reimbursement of overburden expenditures beyond the Medicaid cap formula, did not effectively repeal the state's statvtory obligation to reimburse the counties for expenses incurred prior to 2006 (Matter of County St. Lawrence v. Shah, 9_5/AD3d 1548). Further legislation, tucked into the expansive 2012 state budget bill(L. 2012, c. 56, §61), i.e., "Section 61", then specifically barred subsequent claims for reimbursement of pre-2006 overburden expenditures. That budget bill was introduced January 17, 2012, and was signed into law March 30, effective April 1, 2012 (id at §65). Nevertheless, the petitioner County of Genesee filed such a claim with the Department of Health on December 6, 2013, and an amended claim on December 17, 2013, which was rejected on March 17, 2014, based on the 2012 legislation barring such pre-2006 claims. Petitioner now claims that Section 61 unconstitutionally deprives it of a vested right under §368-a(1 )(h) to full reimbursement for the overburden local share payments taken from petitioner. To the contrary, respondents contend that "the Medicaid cap brought* * * needed fiscal relief to petitioner and all Social Services districts by providing stability, certainty and predictability to their Medicaid costs. By complying with 4 Section 61, respondents achieve a similar outcome, one that lends stability and predictability to the State's Medicaid budgeting process by wafling off liability for district Medicaid expenditures that, if incurred, were incurred long ago" (LoCicero at 'IJ6). Moreover, the DOH still computes what the overburden reimbursement would have been under §368-a. "If the district would have paid less under the prior methodology, the Department issues a refund. If the district would have paid more under the prior methodology, the Department holds it harmless and it, not the district, is responsible for paying those costs that exceeded the district's cap amount" (LoCicero at 'lf38; Stormer at '!121). According to respondents, petitioner itself has realized fiscal savings of more that 5.3 million dollars since the Medicaid cap's inception (Locicero at 'l!43). Thus, while espousing the "Medicaid cap's unarguable benefits to Social Services districts" (loCicero at '!145), respondents do not deny that the DOH "can no longer reimburse Social Services districts for overburden payments formerly authorized by Social Security law §368-a(1)(h)" (LoCicero at 1!39), including those incurred prior to the Medicaid cap. It was concededly the purpose of Section 61 to "'wall-off any further potential State !iabilityfor such overburden reimbursement claims that were submitted on and after the provision's effective date" (Locicero at 'lf50). Respondents note that between introduction of the budget bill on January 17, 2012, and its effective date, many Social Services districts submitted additional claims for reimbursement which were ultimately paid in June of 2012 (Locicero at 'l)52). The petitioner, County of Genesee, however did not. 5 Respondents also contend that petitioner had the ability and opportunity to check the accuracy ofthe coding prior to the effective date of Section 61 (LoCicero at 'Tf'l]28-30) and could have submitted its claim for additional reimbursement in a contemporaneous manner (Locicero at 'Tf62; 18 NYCRR §635.1). Respondents argue that to permit such reimbursement now would "shackle the Department and State with and unknown and unknowable fin;;mcial burden for years, even decades, into the future" (LoCicero at 'l]61). Respondents' arguments, as a matter of public policy going forward, are cogent. · Nonetheless, it has been universally determined throughout the State, albeit only at nisi prius, that Section 61 constitutes an unconstitutional abridgment of an accrued rightto the reimbursement of overburden expenditures incurred prior to 2006 (see MatterofCountyofNiagara v. Shah, Sup Ct, Niagara County, Nugent Panepinto, J., June 18, 2013, Index No. 149492-2013; Matter of County of St. Lawrence v. Shah, Sup Ct, St. Lawrence County, Demarest, J., July31, 2013, Index No. 140712; Matter of County of St. Lawrence v. Shah, Sup Ct, St Lawrence County, Demarest, J., July 31, 2013, Index No. 140998; Matter of County of St. Lawrence v. Shah, Sup Ct, St. Lawrence County, Demarest, J., August 30, 2013, Index No. 0141656; Matter of County of Chemung v. Shah, Sup Ct, Chemung County, O'Shea, J., November 19, 2013, Index No. 2013-1849; Matter of Chautauqua County v. Shah, Sup Ct, Chautauqua County, Chimes, J., December 9, 2013, Index No. 2013-1266; Matter of Jefferson County v. Shah, Sup. Ct, Jefferson County, January 15, 2014, Gilbert, J., Index No. 2013-1956). 6 Given the substantial difference between petitioner's original December 6, 2012 claim, and the amended claim received December 17, 2012, the Court agrees with respondents that the latter date is the measure of timeliness (18 NYCRR §601.4), and that respondent's rejection of petitioner's claim on March 17, 2014, was therefore timely. 2 However, given such, respondents may not now supplement their determination to deny petitioner's initial claim on alternative grounds (Matier of County of Niagara v. Daines, 79 AD3d 1702). Nor does the Court accept petitioner's sophistic argument that Section 61 barred only the claims and not the State's obligation for further reimbursement of overburden expenditures. However characterized, it is clear on the face of the legislation and from the Memorandum in Support that it was intended to deny further reimbursement to alleviate that cost to the State. Section 61 does not, on its face, repeal §368-a, and defendants insist that it does not. However, as advanced by petitioner, even an implicit repealer would run afoul of §93 of the General Construction Law, prohibiting the repeal of statutorily vested rights (compare County of St. Lawrence v. Shah, supra at 1553 -1554). In any event, it is axiomatic that "(a)lthough a statute is not invalld merely because it reaches back to establish the legal significance of events occurring before its enactment, a traditional principle applied in determining the constitutionality of such legislation is that the Legislature is not free to impair vested or property rights" (Matter of Hodes v. Axelrod, 70 NY2d 364, 369 - 370). 7 Therefore, in view of that principle and the foregoing cases at nisi prius, this Court concurs in the conclusion that Section 61 retroactively impairs petitioner's vested right to reimbursement of overburden expenditures and is therefore unconstitutional. Assuming arguendo that petitioner could have moved more quickly in identifying and collecting reimbursement for the additional overburden expenditures, there appears no time limit for claims under §368-a(1)(h); and, mere lateness, without undue prejudice as a result of the delay, does not give rise to a defense of Jach es (see generally Premier Capital v. Best Traders, 88 AD3d 677, 678; Sparkling Waters Lakefront Association v. Shaw, 42 AD3d 801, 803). Thus, it remains that respondents have had and continue to have a mandatory obligation under §368-a(1)(h) to reimburse petitioner for overburden expenditures covered by §620 and 621 of the laws of 1974, through December 31, 2005. It is questionable whether this Court has jurisdiction over petitioner's stand- alone cause of action for unjust enrichment (Sarbro IX v. State of New York Office of General Services, 229 AD2d 91 O; but cf Matter of Gross v. Perales, 72 NY 2d 231 ); but, in any event, that cause of action is academic. Further, "no authority has been called to [its] attention for imposing a constructive trust against one governmental entity forthe benefit of another" (Falfica v. Town of Brookhaven, 69 AD2d 579, 589); and, given the assets and credit of the state, such relief would appear unnecessary (Matter of Yannotti v. D'E/ia, 117 AD2d 609, 610). 8 Accordingly, it shall be and hereby is: ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number one, that the petition-complaint fails to state a cause of action, is denied. ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number two, that respondent's March 17, 2014 determination was not arbitrary, capricious and contrary to law, is denied insofar as it was contrary to law. ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number three, that Chapter 61 bars reimbursement of petitioner's claim, is denied; ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number four, that the petition is barred by the doctrine of !aches, is denied; ORDERED, ADJUDGED AND DECREED, that respondent's objection in point of law number five, that respondent's March 17, 2014 denial of petitioner's reimbursement claim was timely, is granted. ORDERED, ADJUDGED AND DECREED, that petitioner's first cause of action, for mandamus based upon respondents' default under 18 NYCRR §601.4 is dismissed on the law. ORDERED, ADJUDGED AND DECREED, that petitioner's second cause of action is granted to the extent that respondents are hereby directed to comply with the mandatory duty enjoined upon them by law to identify, calculate, and verify the 9 total unreimbursed overburden local share payments made by petitioner prior to January 1, 2006, and to reimburse petitioner for such payments. Further, the Court hereby grants leave for further discovery on the issue (CPLR §408) and, if necessary, will appoint a referee to the extent necessary to supervise the discovery process (CPLR §3104) and determine the final accounting (CPLR §4317[b]; City of Poughkeepsie v. Poughkeepsie Associated Fire Department, 125 AD2d 522). ORDERED, ADJUDGED AND DECREED, that petitioner's third and fourth causes of adion are granted insofar as it is hereby declared that Section 61 is in violation of §93 of the General Construction Law and/or unconstitutional and therefore invalid, null and void. ORDERED, ADJUDGED AND DECREED, that petitioner's fifth cause of action, for violation of various statutes relating to state and local government, is dismissed as academic. ORDERED, ADJUDGED AND DECREED that, based upon the constitutional violation, petitioner's sixth cause of action is granted to the . extent of partial summary judgment against respondents in the amount of $313, 134, plus statutory interest. ORDERED, ADJUDGED AND DECREED, that petitioner's seventh cause ·of action for unjust enrichment is dismissed as academic. ORDERED, ADJUDGED AND DECREED, that petitioner's eighth cause of action, for a constructive trust, is dismissed on the law. lD Proceed accordingly. The foregoing constitutes the Decision and Judgment of the Court. Dated:· May /(, , 2014 Batavia, New York HON. ROBERT C. NOONAN Acting Supreme Court Justice 1. The failure to credit petitioner with the full amount of overburden reimbursement to which it was entitled may also adversely impact petitioner's obligation under the "Medicaid cap" going forward by altering the baseline (Stormer at 'Jl76). 2. Although petitioner argues that "respondents have offered no authority for the proposition that they can restart an unequivocal deadline simply because there was an alleged non-substantive change to the underlying claim" (4/23/14 Buckey affidavit at 8, fn1), this Court would not find the $27, 103 change "non-substantive", and petitioner has itself offered no authority for the proposition that it can impose a prior deadline after such an amendment of its claim. Therefore, in the spirit of fairness in which this proceeding has been brought, the Court will not deny respondents the full benefit of the 90-day determination. 11 Matter of County of Monroe v Shah Index No. 2014-3162 SUPREMJ3 COURT STATE OF NEW YORK COUNTY OF MONROE In the Maner of the COUNTY OF MONROJ~ i'ttltlilliel' -Plaintiff, For a Judgen1~nt Pursnarit to Aiticle 78 oflhe .Chdl Practice Law and Rules ai1d ~ DeclarntO'ly Judgment Pursuant to Sectio'11 3001 o:fthe Civil.Praotico Law and Rules ugni11st lode~#: 2014-3162 NIRAV R. SHAH. M.D .. M.PJL, as· Commissioner of tile New York State Department of Health and THE NEW YORK STATE DEPARTMENT Oli' HP:ALTH, APPEARANCES: R CSJlOJ\OCJlts-l)e fen dioi!S WH!TiiMAN os;ri:<:R.MAN & 1-lANNA.LLl' Cl-mJSTDPHER. E. BUCKEY, ESQ., of Counsel Attotn.cys"for. Poiition~r-Plain:tiff OJlic~ nnd p;o. Address Qne .Corim.iqr.cc Plaza AH!aii;v, NY t:z;;Gp ~y~ ~;r· !~.· ' '· \fh C) C> £-' _;;;:~~ -'~; ~ .. _( Q E:· ~ ~ :& <-c:: r- r <.J "" ::nt: 0 Oi). - ST ATE O.r. NEW YORK OFFICE OF ATTORNEY GENERAL J, RICHARD .l3ENJTEZ, Assistant AtWrncy Ocrieral, of'C.otmsel Attorneys :for Respondenls-Defondan!S Office and l'.O. Address 144 E!;chanbre Blvd. Rochester, NY .146 i 4 l).JLClSJ.-ON AN.D ORDER --------- ·'· " -· (1! ~~ f~tj 0 POLITO, ,J, PJNDINGS OF FACT: Petiti.<)oer by Nolice Clf Petirion and. Comploscs that Petftionerfoourred,{il1 behalf of Respondents prior to Janimry l, 2006, pursuant ro Social s·ecurit)' Law Section 368~a; 3. Co1npel'ling Respondetrlt tp iden.til'y, oalcnlate, verif)"and pqy the !otal re11:iainiilg.ove1'bm'den reimbmse111e.nt due and O\Ving to Petitioner pursuunt lo Social Serv.ices Law Se,otion 368"a; 4. Declaring Section 6.J of Part D of . Chapter 56 llftho Laws of2012 unconstitutional, invulid, and void insofar as it.deprives l'e.Litioncr of vested .Property dghts without due process of law 'in vi.olation of Article l, Section 6 of rhe NY Constitution; 5. Declaring Sec\ion 61 of P~rt D o.l'Chapter 56 or the Laws o.f 2012 unconstitutional, inva.!id.irnd void insofar as ft violates StaMe of Local Govem.ruents Sectio1,1. 11(4) or, alterna1ively, Aiticle'!XSeC'tiC>n 2(b)(l) ofth<.lNY Constit0tioli an<.! Sta~ut~ of Local Governments Section 2; (6) uwimling Petitioner dam~ges iRw1.<1mount to be determined nt li1e final resol.ution of tl1is matter, but in no even less than $4,71~;748.94, to got her with fotei:esl; "J. Imposing a consimcti.ve trnst over the fonds thut·I~espondeots were obligated to reimburse to l'ctitioner, pursuant to Social Services Law Section 368ca, for Medical Assistance Pl1yme11ts made o.n behalf' of DOH; 8. Awarding Peti!ioner costs, disbursements, and attorneys' fees incurred iJI connection wlih this prnoeeding. · Prior to the passage of Section 61 of Part D of Chapte; .. 56 of l;he La~vs of 20.12, both the Third and Fourth Depart111ents ~filrmed kiwer.oo\Uis.in oompellingth<')· State to reimhur.se the Counties for overbtitden expehdifures iru:mrred prlorto.ianuary J, 2006. (See Mlilter ofCoun(y rfSt Lawrence y. Daines, 81 AD3d 212, (3'" be.pt, 2011); Matter·ofCotr!lfY oj'Eriu v. Daines, 83 Al)3d 1506, (411' Dept., 201 l); Nfatlcr. Dept, 2009); See Che1mmg Counly v. Slu1h et. al., lm!e:x # 2013-184.9, (Sup. Ct. Cliernung County, Justice O'Shea, 11/1912013)). The Third Deptirtment thrther !ield that rherespm1dents could not ret1:oa.Nively avoid. their statutory rcimhursemen.t obligations under Soofal Se.rvlces Law Sectlm\ 368-a. (M({/ter of County of St. lm1•rence 11. Shah, 95 ADJd 1548, (]'0 Depl'., 2012}). · '!11erealler, Sectfon 6J Part D of Cha pt.er 56 of tl1e Liws of2012 was passed by the .Legislature wbicl1 provided, that "notwithstanding the jnovisions.of section 368-a of the Social Servfoe$ Law or any other contrury provision of [aw, no·reilnbursement shall be made·fol' social sc.rvices clistrkts' claims submitted 011 m\d aller the affective d~te.0f this ptmigraph, for ~listrict expendililrcs incurred prior to Januaiy l, 2006." 'J'he Respondents relying on this section, have 2. refoscd anci denied reimbrn·semcn! to the County of M.oni'oe and other Countios for their overburden reimbu,rsement. Respondents .have filed 'I ver.ificd answer atid moved for summary j udgmcrit on the declaratory judgment Claims, n~sel'fing: tba!..!he amendment to Sectfon 61 excli1dcs Petitioner's overburden claims .retroactively, · CONCLUSIONS· OF LAW: There have been .se\'eml prior cases, where the s~me ·issues have been rn!scd, throngliout . tho Stnte where.in file Supreme Court in. U10se·Countii;s·have r«iected.Respondents argument tha1 the mnendment to Seci".ion 61 permits tl\e denial of Petitioners overburden claims. (See Clwlnung Cmmry v. Shah et: ct!., fndgx # 2013-1849, (Sup. Ct. Chemung: County,,Justice O'Shea, 11/19/2013.; M[(f/er qf' County qf'Niagal'a:v. Shah, Index #: 201 3-149492, (Sup. Ct, Ni.agnrn County, Justice l'anep.in!o, June 18, 2013); .Maller ofCounly oj'St Lawrence l'. Shah, Index II: 2013-140712, (Sup. Ct,, S!~ Lirwrenee County, Justice Dem•1rast, July 3l,2013}; Matier of County ofSt Lct11wence v. Shah, Index fl·. 2013-140998,.(Sup, Ct., St. Lawrence County, Justi.c-0 Demnrnst, J11ly 3 "I, 2013); lviatter q(County x No,: 149492-2013 Nugent Panepinto, J, WHEREAS, Petitioner County of Niagara ("Petitioner") commenced the above- captioned hybrid CPLR Article 78 proceeding and plenary action by Verified Petition and Complaint, da.ted March 8, 2013, seeking, among other things, to compel Respondents Nirav R. Shah, M.D., M.P.H., as Commissioner of the New York State Department of Health and the New York State Department of Health ("DOH") (collectively "Respondents") to reimburse Petitioner for a total of $2,078,635.44 i.n certain Medicaid costs commonly known as Hwnan Services Overburden ("Overburden") pursuant to State law, to compel Respondents to calculate and pay the total Overburden liability owed to Petitioner, and to declare Section 61 of Part D of Chapter 56 of the Laws of2012 ("Section 61 ")unconstitutional; WHEREAS, Respondents served their Verified Answer and supporting afiidavit of Robert LoCicero sworn to May 3, 2013 in response to the Verified Petition and Complaint on May 3, 2013, and moved for smnmary judgment on Petitioner's declarntory judgment and state Jaw plenary claims, arguing that Respondents were no 1.onger obligated to reimbm·se Petitioner for the claims asserted in this proceeding because Section 61 extinguished Petitioner's right to reimbursement for pre-2006 Overburden costs underSociaI Services Law§ 368-a; WHEREAS, Petitioner served the Reply Affidavit of Nancy Rose Stormer sworn to May 16, 2013 and the Affidavit of Christopher E. Buckey sworn to May 17, 2013 on May 17, 2013 and opposed Respondents' motion for summa1y judgment and cross-moved for stumnary judgment on its declaratory judgment and state law plenary claims and to strike out certai,n paragraphs of Respondents' Verified Answer on the ground that those paragrllophs did not contain a responsive pleading to an allegation contained in the Verified Petition and Complaint. Petitioner contended that Section 61 did not extinguish Petitioner's right to reimbursement for pre-2006 Overburden costs under Social Services Law § 368-a because: (1) the plain language of Section 6 l bars reimbursement for claims that Petitioner was not obligated to submit, and does not impact Respondents' unilateral arid nondiscretionary statutory duty to calculate the total reimbmsement liability under Social Services Law § 368-a li!ld pay Petitioner for the amounts owed; (2) Respondents' decades-long course of intentionally or negligently dilatory conduct pennitted this Court to apply Social Services Law § 368-a as it existed at the time that Petitioner inctu1·ed the Overburden expenses on Respondents' behalf, without c011sideration of Section 61, under the special facts exception; (3) Section 61 is not a clarifying amendm<;mt, but is a substantive deprivation of Petitioner's vested rights to reimbursement for Overburden expenses i11cw·red prior to January 1, 2006 that is being retroactively applied; ( 4) even if the statutory and 2 regulatory bases for Overburden reimbursement had been repealed, Petitioner's vested tights to reimbursement must survive pursuant to General Construction Law§ 93; (5) Seotion 61 deprives Petitioner of due process of law; (6) Respondents' defenses based on the doctrine oflaches and L 2010, ch 109, part B, § 24 (the "2010 Amendment") are bam:>d by collateral estoppel; and (7) Section 61 does not bar Petitioner from recovering for conversion, unjust enrichment, and constructive trust: WHEREAS, the parties stipulated, with the approval of this Court, that Petitioner would serve an Amended Verified Petition and Complaint to include Respondent~' denial of two additional claims of Petitioner for reimbursement of overburden expenses that Petitioner iJicuJTed on behalf of Respondentq prior to January l, 2006, which additional claims totaled $702,219 .42, bringing the total amount of unpaid. overburden reimbursement at issue in this matter to $2,780,854.86; that Respondents would serve a Verified Answer to the Amended Petition without the paragraphs of the Verified Answer, dated May 3, 2013, that were the subject'ofthat portion of Petitioner's cross motion that sought to strike out those paragraphs; that Respondents' Verified Answer to the Amended Petition would supersede the Verified Answer, dated May 3, 2013; and that Petitioner would withdraw that portion of its cross motion that sought to strike out those paragraphs; WHEREAS, Petitioner served the Amended Verified Petition and Complaint, dated May 21, 2013, pursuant to the parties' stipulation; WHEREAS, Respondents served the Verified Answer to the Amended Petition, dated May 23, 2013, without the paragraphs of the Verified Answer, dated May 3, 2013,·that were. the subject of that portion of Petitioner's cross motion that sought to sb'ike out those paragraphs, pursuant to tbe paities' stipulation so ordered by this Court; 3 . WHEREAS, Petitioner tliereupon withdww that p01tion of its cross motion that sought to strike out ceitain paragraphs of Respondents' Verified Answer on the ground that those paragraphs did not contain a responsive pleading to an allegation contained in the Verified Petition and Complaint and, on June 3, 2013, served the Reply Affidavit of Nancy Rose Stormer sworn to May 29, 2013 and the Affidavit of Christopher E. Buckey swam to June 3, 2013 in further support of Petitioner's cross-motion for summary judgment in accordance with the pa.iiies' stipulation; WHEREAS, the Cou1t having heard oral argument of counsel for the parties 011 June 6, 2013; and NOW, upon due consideration of all the pleadings and proceedings in this matter and the oral arguments of counsel, it is hereby. OHDERED, ADJUDGED AND DECREED that, for the reasons set forth ln Petitioner's papers, the defenses asserted by Respondents based upon Section 61 hereby are rejected; a.Ild it is further ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in Petitioner's papers, Respondents are precluded from relying on Section 61 as a ground to deny Petitioner's claims for reimbursement of the Overburden expenses that it incurred on Respondents' behalf prior to January l, 2006 due to their intentional or negligent delays in calculating and paying Petitioner the total Overburden liability owed until Section 61 was enacted; and it is further ORDERED, ADJUDGED AND DECREED that, for the reasons set forth in Petitioner's papers, Petitioner's claim for mandamus to compel is treated under Social ServiCes 4 Law § 368-a as it existed at the time that Petitionei- incurred the Overburden expenses on Respondents' behalf, pursuant to the special facts exception; and it is further ORDERED, ADJUDGED AND DECREED tbat, for the reasons set forth in Petitioner's papers, Section 61 does not extinguish Respondents' unilateral obligation to calculate and reimburse Petitioner for the Overburden expenses it incurred on Respondents' behalf prlor to January 1, 2006, pursuant to Social Services Law § 36&-a; and it is further ORDERED, ADJUDGED AND DECREED that the Amended Verified Petition and Complaint is granted in part and denied in part; and it is further ORDERED, AD.JUDGED AND DECREED that the determinations of Respondents, dated December 12, 2012, December 17, 2012, December 28, 2012, January 10, 2013, January J l, 2013, January 15, 2013, January 23, 2013, and April 10, 2013, purporting to deny Petitioner's claims for reimbmse1nent of the Overburden expenses that Petitioner incurred on behalf of Respondents pl'ior to January l, 2006, pursuant to Social Services Law § 368-a, are hereby annulled; and it is fmther ORDERED, ADJUDGED AND DECREED that Respondents are directed to forthwith allow Petitioner's claims for reimbursement and pay $2,780,854.86 to Petitioner within 30 days of service of Notice of Enny of this Order and Judgment; and it is further ORDERED, ADJUDGED AND DECREED cimt Respondents are directed to forthwith: (A) provide Lo Petitioner all information necessary to identify, verify, and determine the total Overburden expenses that Petitioner incurred on Respondents' behalf prior to January 1, 2006, pursuant to Social Services Law § 368-a; (B) in cooperation with Petitioner and Petitioner's counsel, identify, verify, and detennine the total Overburden expenses that Petitioner incurred on Respondents' behalf prior to January !, 2006 using the RF3 claims submission process; and (C) 5 pay to Petitioner the total Overburden expenses that Petitioner incurred on Respondents' behalf prior to January l, 2006, for which Petitioner has not already received reimbm·sement pursuant to Social Services Law§ 368-a; and it is further ORDERED, AD.JUDGED AND DECREED that the remaining relief requested in the Amended Verified Petition and Complaint is denied as academic. Dated: Niagara, New York June J2', 2013 SO ORDERED, Hon. Catherine Nugent epinto Justice of the Supreme Court GRANTED 6 Matter of County of Oneida v Shah Index No. 2013-1788 02/28/2014 16:39 3157986436 SUPREME COURT PAGE 03 At~ term of Supreme Court oftbe State of New York held in and for the County of O.neida at the Oneida County Courthouse. 200 Elizabeth Street, Utica, New York on the 28'1' day ofFebruary2014, PRESENT: HOl'WRABLE BERNADETTE T. CLARK Juslic~ l"resldlng STATE OF NEW Y0.R1C SUPREME COUH'ff COUNTY OF ONEIDA In the Matter of COUNTY OF o~rn:mA, Petitioner-Plaintiff, For a .Judgment l"11rsuant to Article 78 of the Civil Practice Law and JRnoles and a Der.llll'atory ,Judgment Pursuant to Secti·rn 3001 of the Civil Practice Law NIRAV .R. Sl:IAH, M.]J., M.P.H., as Comntls#loner of the New York Sta·:e Department of Health and THE NEW YORK ST1\TE DEPARTMENT OF HEALTH Respondents-Defendants Procedural History Index No. CA2013-001788 RJJNo. 3:Z-U-0882 Decision. anil Order On Augus1 ZS\ 101.3, Petl.ti.onet filed a Notice of Petitl.on, Verified Petition and Complait1; the Affidavit of Christopher E. Buckey with exhibits and Memorandum of.J..llw. O.n October 15, 2013, '.le•pondents filed an Answer to the Notice of Petl.tion and on October 22, 2013 Petitioner fil•td 11 Notice of Amended Vermed Petition and Complaint and an Amended Verified Petition a.nd Complaint. On or about October 30, 2013 Respondents' filed an Amended Verified An$wer t•:: the Petition and Complaint along with a Motion for Summruy Judgment on the Declaratory Ju(.gmen1 claims. 02/28/2014 15: 39 3157985436 SUPREME COURT PAGE 04 Considered on this motion was a Notice of Petition dated August 29, 2013, along with Petitioner's VerifirJd Petition 11nd Complaint also dated August 29, 2013; Affidavit of Christopher E. Buddey, Esq. sworn to August29, 2103 together with annexed exhibits; Petitioner's Memoi-and.um of Law in Support ofVerHied Petition and Complaint dated August 29, 201.3; CPLR H•J2(b) Notice to Attorney General to Intervene dated August29, 2013; Vei'ified Answer t<: Petition and Complaint dated October 29, 20 l 3; Affidavit of Robert LoCicero "~th ettMbments received on October 29, 2013; Notice of Motion dated October 29, 20.1.3; Memoran.dwn of Law in Support ofResponden.ts Motion for Summaiy Judgment on the Declaratory Judgmen;I: Claims an.d Respon.den:ts' Answer to the A11icle 78 Claims dated. October 29, 2013; Notice o:: Amended Verified Petition and Complaint along with Amended Verified Petitim:i and Complaint dated October l 7, 2013; Respondents' Amended Verified Answer filed in conjc111ction wi1h tbe parti.es' Stipulation. and Order dated October J 7, 2013; Reply Affidavit wi.th attachments nfNa.ncy Rose Stormer, Esq., sworn to October 18, 2013; mid Affidavit of Christopher E. Budcley, Esq. with attachments sworn to on October 18, 2013. Petitioner .!ieeks tbe following relief: (1) annulling tbe determinations of Respondents Nirav R. Shah, M.1') .. M.P.H., as the Comlnissioner of New York State Department of Health, and the New York State Department of Health (collectively, .,Respondents") dated August 20, 2013 and October 10, 2013, purporting to deny Petitioner's claims for reimbursement of the overburden expenaes that Petitioner incurred on behalf of Respondents prior to Janoory I, 2006, pursuant to Soci.al .Services Law Section 368-a, as arbitrary and capricious and/or affected by an error of Jaw; (2) compelling and directing Respondents to approve Petitio11er's claims for reimbursement of 1b.c overburden expenses that Petitioner incurred on bebal.t of Respondents · 2 02/28/2014 1S:39 3157986436 SUPREME COURT PAGE B5 prior to Ja11uary l, '.'.006, pursuant to Social Services Law Section 368-a; (3) compelling Respondents to cakulat.e and pay the total remaining overburden reimbursement due and owing to Petitioner purBUGmtto Social Services J,aw Section 368-a; (4) declaring Section 61.<>f Part D of Chapter 56 of the l. aws of2012 unconstitutional, invalid. and. void. insofar as it deprives Petitioner of vestee p'operty ri~bts without dtte process of law in violation of Article 1, Section 6 of the New York Conotitution; (5) declaring Section 61 of Part D of Chapter 56 of the Laws of 2.012 unconstitutiona1, itivalid and. void insofar as it violates Statute of Local Governments Section 11(4) or, a.lternatively, Article XI, Secti.on 2 (b)(l) of the New York Constitution and Statute of Local G1:•vem:rnents Section 2; (6) awarding Petitioner damages in an amount to be determined at the :l':.nal resolution of this matter, but in no event less than $3,123,878.56, together with interest; (7) imposing a constructive trust over the funds that Responde11ts were obligated to reimburse to Petitinner, pursuant to Social Services Law Section 368-a, for the Medical Assistance payments m.f.\de on behalf of DOH; (8) awarding Petitioner the costs, disbursements, and aitomeys' fee11 incurred in connection with thls proceeding; and (9) awarding Petitioner such other and further rdicf as this Court deems just and proper. Analysis Petitioner':;; ru:giie that "Respondent's have an express, mandatozy and non-discretionruy staiutory duty to r(:,:m:burse Petitioner for the overburden expenses that Petitioner incurred on behalf of DOH, in. ::eliance on that duty. Respondents' can not now rely on a baldly retroactive stat\l!e to avoid th<::ir cl.ear duties and. impair Petitioner's vested right to reimbursement." (Petitioner's Amended Verified Petition and Complaint p. 20), Petitioner's claim that· .Respondents' refusal to reimburse Petitioner the $3~123)878.56 it is owed based exclusively'on 3 02/28/2014 16!39 315798S43S SUPREME COURT PAGE 06 the retroactive app\'ic,.tion of Section 6 l is irrational, arbitrary and capricious. The 1hrust \•f Respondents argument was succinctly stated in their Memorandum of Law; "In ,dmplest terms respondents contend that further reimbursement of ove:rburden claims post Cap gives the counties a double dip into the Medicaid coffers. Respondents have consistently maintained this position through the first and second waves of unsuccessful litigation-at all stops thei:: belief that the Cap statu.te if properly interpreted, walls off reilonbcirsement of post Cap overburden claims, The 2010 Amendment att<•Jnpt~Al to make the necessary adjustment to the Cap statute, but by vht11e-0f appellate review failed to achieve the clarity necessary to accomplish what Section 61 has now fi.nished, With this as a backdrop, it shonlc! come as no smprise that the legislature enacted Section 61 in an atten:J.pt to once !llld for all clarify or remedlate the Cap statute oo that it unamb;guously captures the intended state of the law, e.g. that post Cap , reinab11rsem.eot for pre-Cap overburden claims are prohi.blted. Because Sec1lon 61 is a clarifying amendment to a prior Jaw it may be applied retniac.1ively, despite petitioners protestations to the contrary." (Re11prmdents' Memor!llldum of bw p. 28) After caref1.1Uy reviewing the entire record in this ac1ion, considering the argmne11ts, of counsel as well as ihe facts arid legal analysis set forth in the recent decisions in Supreme Court, Jefferson County ( IJi\bert, J., lndeK No. 2013-1956, November 14, 2013); Su.preme Court Niagara County (N".ip,cnt-Panepinto, J. fodex No, 149492-2013, June 18, 2013), and Supreme Court St Lawre11c~ County (Demarest, J., Index No. 140712, July 31, 2013), this Court, although it attempted, simpJ:• can not add to what has already been written and decided by courts across 1his state. This Court :'in.ds Justice Demarest analysis regarding whether Section 61 is merely a "clarifying" amen.d::ncnt particularly persuasive: "This argument is easily dispensed with by reference to the Third Departmen1:'s ruling in Matter a[Coun(Y of St. Lawrence v. Shah, 95 A.D.3d 1548 (3"' Dept. 21ll2): 4 02/28/2014 16:39 3157986436 SUPREME COURT "This Court has previously held that prior to 2006, upon payment to DOH for services provided to overburden patients for whl,1;h t10 local share was owing, petitioners right to reimbursement for ~.uch expenditures accrued." Matter of St: Lawrence County v. Dai1res, 81 A.D.3d at 216). Thus, the 2010 amendment, even if it mw Intended by the Legislature to repeal Social Services Law Seo1'io,1. 368-a(l)(h), cannot serve to relieve.the state of its obligation to refund the counties for these expenditures made prior to J,;:.nuary 1, 2006 (Matter of County of Niagara v. Daines, 91 A.D.3c.l at 1290)." at page 1554 (emphasis added). Sec·1ion 61 is clearly "intended" to repeal Social Services Law Section 368-a (l)(l( ill order to relieve th.e State ofits obligation to pay reimbursement and so it ce1nnot stand. Insofar as Section ol attempts to deny the County repayment ,,,f obligations already accrued, it is unconstitutional." PAGE 07 Accordingl!'. a:fter oonsideration of all of the pleadings and oral argument of counsel, ft is therefore Ordered that Respondents' August 20, 2013 and October lO, 2013 denial of Petitioner's reimbursement clai:ns is hereby annulled as arbitrary, capdciovs and/or affected by an eiror of law; and it is furthe:r Ordered, ttat Respondents are directed to calculate, verify and pay any ·remaining overburden e>tpens<>s and reimbursement due under Social Services Law Section 368-a "'ithin thirty days ofservi<:e ufNotice of Entry of this Order and Judgment; and it is further Ordered, tl:.a1 Respondents are directed to allow Petitioner's claims for reimbursement and •t!er of COUNTY OF ST. LAWRENCE, Petitioner-Plaintiff For a Judgment Pursuant to Article. 78 of the Civil Practice Law and Rules and a Declaratory Judgment PL1rsuant to Section 3001 of the Civil Practice Law and Rules - against - NIRAV R. SHAH, M.O., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEALTH, Respondents-Defenda.nts. Index No. 140712 DECISION & ORDER IAS #44-1··2013-0103 Appearances: Whiteman, Osterman & Hanha, LLP (Christopher E. Buckey, Esq., Robert S. Rosborough, IV, Esq.; and Monica R. Skanes, Esq., of counsel), and Nancy Rose Stormer, P.C. (Nancy Rose Stormer, Esq., and Michael Bagge, Esq., of counsel), for Petitioner; Eric T. Schneiderman, Attorney General (C. Harris Dague, Esq.,_ Assistant Attorney General, of counsel), for Respondents. I DEMAREST, J. Medicaid is a publicly funded health program ti \ 1intended to provide medical services to the less fortunate members of society. In New York, the benefits are provided through a combination of sources including the federal, stale and local governments. When it was initially implemented, the counties were . 1 I required to provide a percentage of the costs according to specific formulae. These !county costs escalated each year and were substantially increased when the State 11 I. i !began to de-institutionalize certain mentally disabled persons, thus shifting the burden 11 1; ' . H \i .! fJo>w/ 011ml\1t1$.\, JS C SU{IJ C!l\\Q CUuf\ qi) P,\)ul\ souul C11n1on. NY 1 :1611 I , [County of St. Lawrence v. Shah, et al. 11 - Page 2 I I . . 1 [tor their medical care to the counties. In 1982, in recognition of the State's obligation to ii 1 J care for the mentally disabled, the Legislature passed the Human Service Overburden l 'I Law (Soqial Services Law §368-a(1)(h)]. This law required the State to determine which recipients of medical assistance were its responsibility and to refund to the counties any expenditures macje on behalf of those persons. Matter 9J Coul1!Y..of St.J,Jl.wrenr&. . .\L I Shah, 95 A.D. 3d 1548 (3d Dep't 2012). I . JI There was no claim process established for the counties to receive these 11 . "overburden" payments. The State was required to review the payments made by the counties, identify those recipients that were the State's responsibility and refund the money. However, it was discovered that the State was not properly identifying recipients due to improper coding, depriving the counties of proper reimbursement. St. Lawrence and other.counties have had to litigate to collect the money owed them and confront various legal arguments advanced by the Siate in an attempt to avoid . ' payment. Every court that has considered these arguments has rejected them and directed the payments be made. Matter of Coun_\Y. of St. Lawrence v. Daines, 81 A.D. j 3d 212 (3d Dep't2011), Iv. denied 17 N.Y. 3d 703 (2011); MatterofCountvof Herkimer J ' ! 1v. Dain§_g, 60 A.D. 3d 1456 (4'" Dep't 2009), Iv. denied 13 1'1.Y. 3d 707 (2009); Matter of . I Coun!)C..Qf_Ni9gara, 60 A.D. 3d 1460 (41h Dep't 2009), Iv. denied 13 N.Y. 3d 708 (2009); Matter of County: of St. Lawrence v. Sh§h, 95 A.D. 3d 1548 (3d Dep't 2012). 1-l This proceeding was commenced when, once again, St. Lawrence !county's ("the County") attempts to collect the sums due it were rejected by the State ! I :Department of Health ("DOH"). The State now relies upon Section 61 of Part D of i· i jChapter 56 of the Laws of 2012-("Section 61"). That statute expressly provides that: ~ . ' .. ()(lvltl Ooo\mt:~\, J.S C County of St. Lawrence v. Shah, et aL 3 "[n]otwithstanding the provisions of section 368-a of the social services law or any other contrary provisions of law, no reimbursement shall be made for social services districts' claims submitted on and after tt1e effective date of !his paragraph, for district expenditures lncurreq prior to January 1, 2006." Page On October 3, 2012, the County, using available source materials, identified "overburden" expenditures of $495, 116 and submitted a claim for /reimbursement of that amount, pursuant lo Social Services Law §368-a. That claim I 'jwas rejected based upon Section 61, and !his proceeding ensued. The County seeks the following relief: 1. Annulling the determination of the Respondents to deny reimbursement of the overburden expenses incurred prior to January 1, 2006, as being arbitrary and capricious and/or affected by an error of law: 2. Compelling the Respondents to approve and pay the claim: 3. Declaring Section 61 unconstitutional as it denies the County of vested property rights without due process of law; 4, Declaring Section 61 unconstitutional as it violates Statute of Local I IGove1111r1ents §11 (4) or, alternatively, Article IX, §2(b)(1) of the New York State Constitution and Statute of Local Governments §2: . i 5. Award damages of at least $495, 116; 6. Impose a constructive trust over the funds that Respondents were I obligated lo reimburse the County pursuant to Social Services Law §368-a: I 7. Award the costs, disbursements and attorney's fees incurred. p ,. '. ,,,, j, Suf}(llll\IT CouJ1 ; l •lll Cowl Strcr~\ Crml<.111, WY 1:'.1817 I I I D~ .. u Onmmc111. J.S.C s~•!)t{tlotr eourt •1 B Col.ITT Sime\ \.:D1)\lm NY 1$!1 j/ j! i County of St. Lawrence v. Shah, et al. I Page 4 I ====~~~~~~~~~~~~~~~~~~~~~~~~~~= I Respondents move for summary judgment on the declaratory judgment 1 I and State law claims. Petitioner cross-moves for similar relief. In support of the motion, Responden!s submit the affidavit of the Deputy Director for Administration with the New York State Department of Health. He candidly l admits that Section 61 was inserted into the 2012 Budget Bill in order to "wall off" any I further claims from counties for reimbursement for overburden expenditures incurred prior to January 1, 2006. Despite consistent judicial determinations that prior I ii Ii l ii ., l• 11 ii I! ii " :i !i 'il il :) .J ii amendments to the Social Services Law establishing local "caps" did not out off a county's right to bE! reimbursed for overburden payments, the Respor;dents are taking the position that Section 61 is merely a "clarifying" statute, making it clear that previous amendments were meant to deprive a county of any ability to make further claims for payment. This argument is easily dispensed with by reference to the Third Department's ruling in Matter of Countv of St. !,&wrenoe v. Shah, 95 A.O. 3d 1548 (3d Dep't 2012): "This Court has previously held that 'prior to 2006, upon payment to DOH for services provided to overburdened patients for which no local share was owing, petitioners right to reimbursement for such expenditures accrued.' (Matter of St. Lawrence County v. Daines, $1 A.O. 3d at 216).' Thus, the 2010 amendment, even if ii was intended by the Legislature to repeal Social Seivioes Law §368-a (1)(h), cannot serve to relieve the state of its obligation to refund the counties for these expenditures made prior to January 1, 2006 (see Matter of County of Niagara v. Danes, 91 A.O. 3d at 1290)." at page 1554 (emphasis added). 01.1v11:I Oam~rem, J.S C. ! I i County of St. Lawrence v_ Shah, et al. Page 5 ' ) ~~~~~~~~=-~~=-~~~=-~~~-----=-=-~=---~=--= t ' \ Section 61 is clearly "intended" to repeal Social Services Law §368-a I . I (1)(h) in order to relieve the State of its obligation to pay reimbursement and so it cannot stand. Insofar as Section 61 attempts to deny the County repayment of obligations already accrued, it is unconstitutional. Petitioner's request for an order annulling the December 4, 2012. decision of the Respondents denying Petitioner's claim for reimbursement as arbitrary, capricious and/or affected by an error of Jaw is, in all respects, granted. Petitioner's request for an <;>rder In the nature of mandamus directing the Respondents to re.view, verify and pay any legitimate claimed overburden expenses Is granted. Respondents are directed to pay the pending claim of $495,116.00 or provide I proof that any or all of the claim Is not legitimate within thl~y (30) days of service with notice of entry of this Decision and Order. Petitioner's other requested relief is deemed moot. Petitioner's request for attorney's fees Is denied in light of the Respondents' reliance upon Section 61 which, on its face, supported the position taken to deny the claims. SO ORDERED i I DATED: July 31, 2013, at Chambers. Canton, New York_ ~~ ; {Decision & Order. and moving papers filed} ! S<1Jll.:il1\a C!!Vii ; · 48 f;O\lt\ SIHHll Cnrnon. NY 13Gl7 ' '' " il 11 11 l. f I APPENDIX Submissions Considered I I 11. Notice of Petition, dated February 12, 2013. j 2. Affidavit, with attachments, of Christopher E. Buckey, Esq., sworn to February 12, ' 2013. 3. Summons, dated February 12, 2013. 4. Verified Petition and Complaint, dated February 12, 2013. 15. CPLR 1012(b) Notice to Attorney General to Intervene, dated February 12, 2013. 6. Petitioner's Memorandum of Law in Support of the Verified Petition and Complaint, dated February 12, 2013. . 7. Notice of Motion for Summary Judgment on the Declaratory Judgment and State I Law Claims, dated April 8, 2013. 8. Memorandum of Law in Support of Respondents' Motion for SJ, dated April 8, 2013. 9. Verified Answer to Petition and Complaint, dated April 8, 2013. 10. Affidavit, with attachments; of Robert LoCicero, sworn to April 2, 2013. 1 ·1. Notice of Cross-Motion, dated April 26, 2013. 12. Affidavit of Service of Cross-Motion, sworn to May 1, 2013. 13. Reply Affidavit, with attachments, of Nancy'Rose Stormer, Esq., sworn to April 26, 1 2013. 14. Affidavit, with attachments, of Robert S. Rosborough, IV, Esq .. , sworn to April 26, 12013. •15. Memorandum of law in Opposition to Respondent's Motion, dated April 26, 2013. 16. Combined Memorandum of Law in Opposition to Petitioner's Cross-Motion and in Reply to Respondent's Motion for Summary Judgment, dati"d May 3, 2013. 17. Reply Affidavit, with attachments, of Nancy Rose Stormer, Esq., sworn to April 26, 2013. 18. Affidavit, with attachments, of Christopher E. Buckey, Esq., sworn to May 8. 2013. 19. Memorandum of Law in further support fo Petitioner's .cross-Motion for Summary Judgment, dated May 8, 2013. Matter of County of St. Lawrence v Shah Index No. 140998 (, . .,,,Q Oiinia1os1. J S.C Supro;mwCc11rl ./{J Co111l $1rue1 G~rnon NY i:1Gn STATE OF NEW YORK !SUPREME CO_IJRT COUNTY OF ST. LAWRENCE I lln the Matter of icoUNTY OF ST. LAWRENCE, I I · Petitioner~Plaintiff . Index No. 140998 / For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules and a Declaratory Judgment Pursuant to Section 3001 of the Civil Practice Law and Rules - against - NIRAV R. SHAH, M.D., M.P.H., as Commissioner of the New York State Department of Health and THE NEW YORK STATE DEPARTMENT OF HEAL TH, Respondents-Defendants. DECISION & ORDER IAS #44-1-2013-0237 Appearances: Whiteman, Osterman & Hanna, LLP (Christopher E. Buckey, Esq., Robert S. Rosborough, IV, Esq., and Monica R. Skanes, Esq., of counsel), and Nancy Rose Stormer, P.C. (Nancy Rose Stormer, Esq., and Michael Bagge, Esq., of counsel), for Petitioner; Eric T. Schneiderman, Attorney General (C. Harris Dague, Esq., Assistant Attorney General, of counsel), for Respondents. DEMAREST, J. Petitioner's request for relief is granted, in part, Section 61 is clearly "intended" to repeal Social Services Law §368-a Jc1 )(h) in order to relieve the State of its obligation to pay reimbursement and so it IJ j Jcannot stand. Insofar as Section 61 attempts to deny the County repayment of ! lob ligations already accrued, it is unconstitutional. ] l ! ' O: JUDGMENT Index No.: CV-2013-014)656 IAS Case No.: 44-1-2013-0476 Demarest, J. 'WJB!EREAS, Petitioner County of St. Lawrence ("Petitioner") commenced the above- captioned hybrid CPLR Article 78 proceeding end plenary action by Verified Petition and Complaint, dated JuJy 12, 2013, seeking, arnong other things, to compel Respo11dents Nirav R. Shnh, M.D., M.P.H., ns Commissioner of the New York State Department of Health and the New York State Deprutment of Health ("DOH") (collectively "Respondents") to reirnbiu·se Petitioner for a total of $84,203.96 in certain Medical Assistance costs commonly known as Human Services Overburden ("Overburden") pursuant to State law, to compel Respondents to calculate and pay the total Overburden liability owed to Petitioner, and to declare Section 61 of Part D of Chapter 56 of the Laws of20l2 ("Secti0116l") unconstitutional; '1 :1 I WHJH:Rl&AS, Respondents served theil' Verified Answer and supporting Affidavit of Robert LoCicero sworn to August 1, 2013 in response to the Verified Petition and Complaint on August 9, 2013, and moved for summaty judgment on Petitioner's declaratory judgment.and· statt. law plenary claims, arglling fuat Respondents were no longer obligated to reimburse Petitioner for the claims asserted in this proceeding becat1se Section 61 e;.,.'iinguished Petitioner's right to reLmbursement for pre-2006 Overburden costs tmder Social ServLces Law § 368-a.; Wil:ll!tREAS, Petition.er served the Reply Affirmation of Nancy Rose Storme1· dated August 14, 2013 and the Affidavit of Christopher E. Buckey sworn to August 14, 2013 on August 14, 2013 and opposed Respondents' motion for Stlltll:llary judgment on its declaratory judgment and state law plenary claims. Petitioner contended that Section 61 did not extinguish . Petitioner's right to reimbursement for pre-2006 Overburden costs under Social Services Law § 368-a because: (1) this Court has expregsly struck down Section 61, holding tliat, insofar as Section 61 attempts to d.eny Petitioner repayment of obligations already accrued, it is 11nconstii11tional; (2) the plain language of Section 61 barn reimbursement for claim.g fuat Petitioner was not obligated to submit, and does not impact Respondents' unilatetal. and nond.iscretionary statutory duty to calctJlate the total reimburseinent liability ttnder Social Services Law § 368-a and pay Petitioner for the amounts owed; (3) Respondents' decades-long course ofinte11tionally or negligently dilatory conduct pennits this Court to apply Social Services Law § 368-a as it existed at the tinie tha.t Petitioner incuned the Overburden expenses on Respon.dents'.behalf, without consideration of Section 61, under the special facts exception; (4) Section 61 is not a ol.arifying amendment, but is a substantive deprivulion of Petitioner's vested righw to reimbursement for Overb11rde11 expenses incurred prior lo January l, 2006 that is being retsoactively applied; (5) even if lhe statutory and regulatory bases for Overburden 2 reimbcn·sernent had been repealed, Petitioner's vested rights to reimbursement must smvive pursuant to General Construction Law§ 93; (6) Section 61. deprives Petitioner of due process of law; (7) Respondents' defense based on the doctrine of laches is batred by collateral estoppel; and (8) Section 61 does 11ot bar .Petitioner from recovering for conve1'Sion, unjust enrichment, and. constructive trust; WT!U~JRJB:AS, the Court having heard oral argument of cocmsel for tbe parties on August 16, 2013; and NOW, upon due considemtion of all the pleadings and. proceedings in this matter and the oral ru·guments of counsel, it is hereby ORJl)EREJ[), AlD>JifJDGJED AND ll>ECIIU:ED that, for the reasons set forth in Petitioner's papers, and in this Court's previous decisions in Matter of County of_,St. Lawrence v Shah., Sup Ct, St. Lawrence County, July 31, 2013, Demarest, J., Index No. CV-2013-140712 (atln0hed hereto a~ EJ!.hibit A), and f\11\tter of ColllltY....Qf St. Lawrence v Shah, Sup Ct, St. Lawrence County, July 31, 2013, Demarest, .T., Index No, CV-2013-140998 (attached hereto as !i:xhilt>it B) (collectively the "Recent Decisions"), the defenses asserted by Respondent~ based upon Section 61 hereby are rejected; and it is further OmJ)JlflRED, ADJUDGED AND J)f,CRJB;JEJ) that, for the reasons set. fmtlJ in Petiti.011er's papers, and in the Recent Decisions, Petitioner's request fur an order annulling the Respondents' decision dated April 10, 2013 denying its reimbursement claim as being arbttrary, capricious and/or affected by an en-or of law is, in all respects, granted; and it is further OJIDEJRED, Al!l\JllJDGED AND DECREED that, for th.e 1-easons set forth il1 Petiti<)ner's papers, IJ1e Recent Decisions, and in the Third Department's decisions in Mfl.tt~r of County of St. Lawr~nce v Shah, 95 A.D.3d 1548 (3d Dept 2012) and Matter of County of St. 3 Lawrence v Paines, 81 AD3d 212 (3d Dept 2011), this Court finds that Petitioner's right to reirnbursement under Social Services Law § 368-a a.corued prior to 2006, upon Petitioner's payment to DOH for services provided to overburdened patients for which no local share was owing; and it is fuiiher OlfWEIRED, Al)JlJl[)GED AND DECREED that, for the reasons set forth in Petitioner's papers, the Recent Decisions, and in tl1e Third Department's decisions in Matter of Co1111\)'_of $.t, Lftwrens:s...Yll.hah, 95 A.D.3d 1.548 (3d Dept 2012) and Matter of County of St. J:.,awrence v Daines, 81 AD3d 212 (3d Dept 2011), this Comi finds tl1at Petitioner's dght to reim.bu.rsement under Social Services Law§ 368-a is a vested right that cannot be extinguished by retroactive legislation; and it is further OJRJ[)ERIW>, ADJfllJDGED AND ID>ltCRE~;l!J> that, for the reasons set fotth in PeLitioner's papers, and in the Re.cent Decisions, this Collti finds Urnt Section 61 is clearly intended to repeal Social Services Law§ 368-a(l)(h) in order to relieve the State of its obligation to pay .reimbursement and so it cannot stand; and it is fi.u.ther OJRIJ>EJRE][), ADJUDGED AND DECJJmEJD that, for the reasons set fo1'th in Petitioner's papers, and in 'lhe Recent Decisions, this Court finds that insofar as Section 61 attempts to deny the County repayment of obligations already accrued, it is unconstitutional; and it is forther ORl[H!:REIJll, AD.JfUJ)GED AND l)ECRl!i;ED that, for the reasons set forth in Petitioner's papers, and in lhe Recent Decisions, this Court holds that Section 61 does not extinguish Re51,ondents' unilateral obligation to calculate and reimburse Petitioner for the Overburden expenses it inctu-red on Respondents' behalf prior to Janu.ary l, 2006, pursuant to Social Services Law§ 368-a; and it is ful'ther 4 ORDERED, AD.JlJJO>GED AND DECREED that, for the reasons set fo1ih in Petitioner's papers, and in the Recent Decisions, Petitioner's request for an order in the nature of mandamus directing the Respondents to review, verify and pay any legitimate claimed overburden expenses is granted; and it i.s further OJR][)ERJ!l:D, i\.JlJJUDGED AND DECREED that, for the reasons set forth in Petitioner's papers, and in the Recent Decisions, Respondents are directed to pay the pen.ding claim of$84,203.96 or provide proof that tmy or all oftbe claim is n.ot legitimate within 30 days of service with Notice of Entry of this Decision and Order; and it is further ORDERED, ADJIUDGED AND JDJE that Respondent' are directed to forthwith: (A) provide to Petitioner all infonnation. necessary to identify, verify, and determine the total Overburden expeilSes that Petitioner in.curred on Respondents' behalf prior to January J, 2006, pursuant to Social Services Law § '.l68"a; (l3) in cooperation with Petitioner and Petitioner's counsel, identify, verify, and determine the total Overburden expenses that Petitioner incurred on Respondents' behalf p1ior to January l, 2006 using the RF3 claims submission process; and (C) pay to Petitioner the total Overburden expenses that Petitioner incurred on Respondents' behalf prior to January l, 2006, for which Petitioner has not already received reimbursement pursna11t to Social Services Law § 368-a; and it is further ORDIB:Rli:JDJ, AJ)JUJ)GED AN~) J)llJ:INl;.L FILED .n i5 ... Exhibits A and B intentionally excluded.